The UK’s Revenue and Customs agency (HMRC), which is responsible for collecting taxes, issued a detailed report on how crypto assets might be taxed, but this for now applies only to individual traders and not to businesses.
UK taxation on crypto assets
The UK government is signaling that it is treating crypto assets more as property than as a form of money. And this is in contrast with the main idea of cryptocurrencies, being an alternative form of digital currency, a decentralized form of financial payments and different from so called fiat currencies and money.
HMRC does not consider crypto assets to be currency or money, but rather utility tokens or security tokens. A very important highlight is that, for tax purposes, the focus is on the token’s use, and by no means based on its definition. What this really means is that individual traders or investors in the UK will pay capital gains and income tax if they receive cryptocurrency tokens by their employers as a form of compensation, such as a bonus for their performance.
It is also noteworthy to mention HMRC will not consider the purchase and sale of crypto assets to be the same as gambling. And HMRC will soon issue guidance about tax issues related to the businesses and more details about how the forks of a blockchain may impact taxation as well.
Beware of cryptocurrency trading groups
Researchers recently announced that they found literally thousands of groups on messaging applications with the main purpose the manipulating the price of cryptocurrencies, which is both illegal and immoral. What is interesting in the report is that the lower the volume of cryptocurrencies, the much easier it is for their price to be manipulated due to the illiquid market conditions.
In the US, where the regulation of financial and capital markets is very strict and high fines are imposed on fraudulent activities, two bills about cryptocurrency manipulation will soon be sent for consideration to the House of Representatives. And it is no surprise that technological stock exchange Nasdaq has mentioned that it already has a technology that can address potential manipulation of the cryptocurrency market.
Trading in any financial market entails a lot of risk regarding losses of the invested capital. The cryptocurrency market is no exception, and though it has been criticized heavily in the recent past, the appearance of illegal pump-and-dump groups should really be of no surprise at all. It is highly recommended that traders avoid these groups, conduct their own due diligence, and invest or trade based on their own trading plan.
Financial history has shown that these illegal groups have been active in equities, mainly low volume stocks, the Forex market, options and in general, almost all types of financial instruments.