But last month the country’s financial regulator warned people about investing in cryptocurrencies and said they should expect to lose all the money invested in the crypto space. And just recently, Britain’s chief financial minister declared the UK plans on being a crypto powerhouse.
These opposing views show just how uncertain crypto’s future was in the UK, but just recently the government announced that it will put in place regulations where stablecoins will be accepted as a valid form of payment.
Most online betting sites that are listed on web pages like betting.co.uk are already accepting cryptocurrency as a form of payment, but with the advent of a British stablecoin, the floodgates will be open for Britains to advance to an online world driven by crypto.
If you are not familiar with stablecoins, they are digital tokens that are backed 1:1 with a country’s native fiat currency, in this case, the British Pound. There are financial institutions that hold in reserve the same amount of British Pounds as they issue out to users in the form of a digital token, that is interchangeable with the paper-backed pound. These institutions are heavily regulated and audited on a regular base for obvious reasons.
It will be these stablecoins that lead the way for customers to on-ramp from the paper Pound into the world of crypto. Be it to invest, trade or even purchase goods online using crypto. Cryptocurrency advocates say that the technology will no doubt make payments more transparent, easier and faster. But the sceptics are laying in by saying that it could be used for nefarious activities such as laundering money and also guilty of a larger carbon footprint as “mining” or maintaining the crypto ledgers uses vast amounts of energy contributing to carbon emissions.
New legislation
On the 4th of April this year, the United Kingdom announced their strategy of harnessing the power of the blockchain to make payments easier for customers. The legislation will be passed to bring stablecoins under the same regulatory framework to comply with current payment laws.
Here are some key points to note about the UK’s push towards Brittan being a cryptocurrency hub:
- First off, will be the legalisation of stablecoins as an accepted form of payment to pave the way for the UK to become a cryptocurrency hub.
- An FCA Led collaboration with the royal mint to an NFT (non-fungible token) and the formation of a group to engage and closely work with the financial industry. The Chancellor of the Exchequer, Rishi Sunak, has given instruction to the royal mint to design such an NFT and to be released by the summer.
- The UK government will pass legislation to bring a regulatory framework for stablecoin issuers and service providers to operate in the UK.
- John Glen, the Economic Secretary, has stated that the UK will harness the benefits of blockchain technology and the power the distributed ledger offers to transform the financial markets. These technology attributes allow data to be shared and synchronised in a decentralised system, offering much more efficiency, transparency, and resilience to tampering.
- Britain will later this year consult on further developing legislation for broader crypto assets like Bitcoin. It will consider the carbon footprint and energy usage of such blockchain networks.
- The new plan for crypto adoption wants to explore the potential of the blockchain to issue government bonds and gilts.
How will this affect me?
All of this will undoubtedly beg the question of how taxes will be implemented on goods and services paid with crypto.
When considering paying with a British stablecoin, it will no doubt make the payment of taxes on goods and services much easier. Still, when looking at traditional cryptocurrencies like bitcoin, the following currently applies in the UK.
You will not be required to pay tax on your cryptocurrencies when you are:
- Buying crypto with GBP.
- Holding crypto in a digital wallet. (only on the sale thereof)
- Transferring cryptocurrency between your personal digital wallets.
- Donating cryptocurrency to a charity.
- Gifting cryptocurrency to a spouse.
It is also worth noting that you can offset capital losses against your capital gains when it comes to cryptocurrency, and you can carry forward the registered losses to offset any of your future capital gains.