Cryptocurrencies in the UK: Everything You Need to Know

Cryptocurrencies in the UK: Everything You Need to Know

14 mins read

Cryptocurrencies have been at the center of many discussions over the past few years, with many people discussing their potential benefits and whether they should be allowed in one form or another.

While cryptocurrencies have been banned in some countries, the United Kingdom has taken a more relaxed approach to regulating them, as they’re seen as having the potential to revolutionize the banking industry and create many new opportunities for entrepreneurs looking to make money and improve lives with their ideas. Here’s what you need to know about cryptocurrencies in the UK.

What’s cryptocurrency?

Cryptocurrency is a digital asset designed to work as a medium of exchange. It uses cryptography to secure and verify transactions, and uses blockchain technology for distributed ledger technology. A cryptocurrency is not controlled by any central authority, rendering it theoretically immune to government interference or manipulation. 

The short answer is yes, although you’ll find a few notable exceptions—like Bangladesh and Bolivia. On one end of the spectrum are countries like Japan, where digital currencies have become a legal payment method. 

Meanwhile, China has taken an aggressive stance against cryptocurrency with regulations that state that those who mine, buy or sell cryptocurrencies can be jailed for up to four years.

While it may not be worth going to jail over a digital currency transaction, you’ll want to familiarize yourself with cryptocurrency regulations before trying your hand at any kind of exchange in these countries or others.

To learn more about cryptocurrencies like Bitcoin, Etherium, Litecoin and others, read on! Are Cryptocurrencies Regulated?: While some countries have explicitly allowed their use and trade, others have banned or restricted it. Likewise, various government agencies, departments, and courts have classified bitcoins differently.

China Central Bank banned initial coin offerings (ICO) in September 2017 while classifying bitcoin as legal property; however, bitcoin is neither issued nor regulated by any sovereign nation-state but rather exists independently as an open source protocol which can be utilized by anyone who wishes to develop applications utilizing its codebase.

In November 2017 PwC accepted bitcoin at its Hong Kong office in exchange for providing advisory services to local companies who are seeking assistance with fundraising via ICOs.

Credits: Nick JM

How do you get started with cryptocurrency?

Cryptocurrency is still a new field and you may find yourself wondering where to begin. Well, you’re not alone—and thankfully, it’s getting easier all of the time.

Cryptocurrency marketplaces like Coinbase make it simple to buy your first cryptocurrency. All you need is an email address and money; with just those two items, you can start trading right away. If you decide that cryptocurrency isn’t for you or if things don’t go as planned, no sweat—you can sell back your coins at any time.

There are a number of ways you can get started with cryptocurrency. If you already have some money you’d like to invest, exchanges such as Coinbase and Kraken allow you to buy and sell several different cryptocurrencies. Cryptocurrency exchanges work like stock markets.

So if you want to get into cryptocurrency but don’t have any money—or simply aren’t ready for something as involved as an exchange—you can start mining for cryptocurrency or by trading it with someone else who has some.

The process is less straightforward than simply buying it on an exchange, but there are plenty of resources available online that explain how to do it.

Do you have to pay tax if you make money from trading cryptocurrency?

If you make money from trading cryptocurrency, then you may have to pay tax on that income. It’s important to understand how cryptocurrencies are taxed by law to make sure you aren’t caught out by any changes down the line.

The good news is that HMRC doesn’t consider virtual currencies to be a currency—but more like assets or properties. This means that cryptocurrency profits are subject to capital gains tax rather than income tax if they don’t relate to your main business activity.

However, if you do buy and sell cryptocurrencies as part of your main business activity (for example, if you run an exchange), then you will be taxed under standard income tax rules. 

The short answer is yes, you do have to pay tax if you make money from trading cryptocurrency. This means whether you’re a day trader or hold onto cryptocurrency as an investment, gains will be taxable.

Gains come from selling your cryptocurrency at a higher price than what you bought it for – and since every country’s tax code is different, how much you’ll pay depends on where you live.

In most developed countries, profits from cryptocurrencies are taxed as income and fall under capital gains tax laws.

If your country uses sales tax (like many European nations), then sales taxes will also apply to digital currency trading. But there are exceptions to these rules… Some countries only tax physical cryptocurrency holdings.

If a cryptocurrency isn’t considered property or an asset but instead classed as money (like cash), it could fall under Stamp Duty Land Tax—though not for much longer… <This part should talk about – What does Stamp Duty Land Tax mean for Cryptocurrency?:

Stamps duty land tax was brought into force in 1694 to prevent people buying and selling property without paying taxes on them first – so technically anything that can be bought and sold can fall under stamp duty land tax rules.

The risks involved with investing in cryptocurrency

With so many risks involved with cryptocurrency investing, it’s important that you do as much research as possible before jumping in.

For example, you could investigate price fluctuations and whether or not they are being driven by increasing demand or being controlled by a small group of investors (known as pump and dump groups).

Once you’ve done your research, it’s important that you’re comfortable with taking on risk. Remember—risk means opportunity for profit too! Finding a balance between your comfort level and how much profit potential an investment offers is vital for getting more successful at investing.

A single cryptocurrency, Bitcoin, is trading at over $3,400 as of today. That’s a 700% increase from January 2017. People are making money—and lots of it. However, there are risks involved with investing in cryptocurrency.

As its popularity rises, so does its potential for risk-taking and fraud. If you’re considering investing in cryptocurrencies such as Bitcoin or Etherium but aren’t sure how to go about it, here’s everything you need to know about crypto investments in Great Britain (UK).

The key question that needs to be answered is whether any given cryptocurrency will end up being more like Apple stock (NASDAQ:AAPL) or Enron stock (NYSE:ENRN)? In other words, will I wake up one day soon realizing that my investment has evaporated into thin air? For now, I’m going to take a wait-and-see approach before investing any serious money into cryptocurrencies. The value of virtual currencies could rise substantially from current levels.

Is cryptocurrency legal?

Cryptocurrency is legal and completely unregulated in most countries. Unfortunately, that means there are no laws guaranteeing you anything when it comes to exchanges failing or exchange rates going haywire.

With that said, transactions made with virtual money are subject to normal local tax laws (though some cryptocurrency advocates would argue for its exemption).

So, if you make a profit from cryptocurrency investments, it may be taxable income—which means buying cryptocurrencies with cash is probably a bad idea. Also keep in mind that if a government decides it doesn’t like cryptocurrency (for whatever reason), they can still ban it or heavily regulate how it’s used/who can use it.

Are there regulations concerning using crypto as payment method?

Of course, there are no regulations concerning using crypto as payment method. This means that it is legal and you can use cryptocurrencies anywhere.

With any other payment method, however, some businesses will be more willing to accept your money than others due to regulatory restrictions that exist in their country of operation or how they prefer to receive payment.

Cryptocurrency has no regulation as of right now (and may not have any for quite a while), but unless you’re dealing with a giant company like Microsoft (which accepts Bitcoin), many online businesses will choose credit card over cryptocurrency anyway simply because they can avoid chargebacks and fraud far easier through a credit card system and third-party processors such as Stripe.

Where can I find resources about crypto online?

On Reddit, there’s a subreddit called r/cryptocurrency. On Twitter, there are a number of accounts you can follow for crypto news and updates. Bitcoin has its own dedicated following as well. Also consider checking out cryptocurrency-related conferences, like Consensus and Crypto Invest Summit.

Most major cities now have at least one meetup group or blockchain community that also hold events regularly; a quick Google search should help you find an appropriate group for your area.

Every business will benefit from some kind of legal guidance when it comes to transactions; contact your attorney general’s office if you’re unsure whether something is properly licensed by authorities.

What should I know about cryptocurrencies? – Are cryptocurrencies regulated in my country? – Where can I get resources about cryptocurrencies?

The most popular types of cryptocurrencies today are those built on top of Ethereum. These so-called ERC20 tokens offer functionality similar to that provided by traditional money—you can buy them with cash and use them as currency—but their underlying technology makes them much more powerful than standard money.

Verdict

If you want to use cryptocurrencies, then you need to do so with a legal and regulated company. Otherwise, you’re on your own when it comes to any potential issues that might arise as a result of your trading.

Currently, most of these types of services can only be accessed via an exchange that is based outside of the United Kingdom.

As far as authorities are concerned, there’s no way for them to regulate activities conducted over cryptocurrency exchanges or platforms because they don’t have control over them.

In other words, once a user deposits money into their account and buys cryptocurrency tokens (which are not considered legal tender), it’s out of sight for authorities—and out of mind for some individuals seeking profit at all costs.

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