By now we’ve taken a look on cryptocurrency regulations of many different countries. And if you read all articles published in this series carefully, you might’ve spotted a clear pattern – most of the developed countries in the world have embraced cryptocurrencies wholeheartedly, while most of the developing and less developed countries have turned their backs on this new financial revolution. This pattern becomes even more evident when we look at the situation in United Kingdom. Despite not having any proper regulations around them UK has largely been welcoming of cryptocurrencies. Let’s take a detailed look on the regulatory scenario of this country to understand things in a better way:
Current Legal Status of Cryptocurrencies in United Kingdom
Currently Bitcoin and other cryptocurrencies are unregulated in UK. They’re treated as foreign currencies for most purposes, including VAT and GST. No VAT is levied when a cryptocurrency is exchanged for Sterling, Euro, Dollar or other currencies, but VAT is levied in normal manner on buy-sell transactions involving a cryptocurrency. For example, if someone sells something in exchange of a certain amount in cryptocurrencies, VAT is levied on the seller based on Sterling value of transaction. Profits from cryptocurrency trading attract Capital Gains Tax, and exchanges are required to obtain licenses from Financial Conduct Authority (FCA).
Cryptocurrency Regulation in United Kingdom: Recent Developments
Cryptocurrencies may be unregulated in United Kingdom, but recent developments suggest that country is working on its own cryptocurrency regulation framework. This became clear last month on 21st of March when UK’s Junior Finance Minister John Glenn revealed at a conference that his government is planning to conduct a special study on potential risks and rewards of cryptocurrencies in the days coming ahead. Once this study has been completed, it’s quite possible that some new rules and regulations may be framed to regulate crypto trade in the country.
However, regulations don’t necessarily need to be too restrictive in nature. UK for the large part of time has been quite supportive of cryptocurrencies, and this was evident in John Glenn’s remarks as well. While Glenn had said that his country wants to assess the risks and rewards of cryptocurrencies in detail, he had also added at the same time that London is a leading FinTech hub in the world and the government will want to maintain that lead. A number of leading cryptocurrency exchanges, including Coinbase, have their offices in UK. Plus, Bank of England Governor Mike Carney had also told G20 nations recently that cryptocurrencies don’t necessarily pose a risk to international financial stability.
Future of Cryptocurrency Regulation in United Kingdom
UK may reveal its own cryptocurrency regulations in future, thus putting an end to the ‘unregulated’ status of cryptocurrencies. However, it’s highly unlikely that this country will come out with something as extraordinarily restrictive as China or India. Like majority of other developed nations UK is also likely to adopt an approach that can curb the use of cryptocurrencies for illegal activities without putting a toll on the positive aspects of these currencies. So we can count on UK as another safe territory for crypto world.