Cryptocurrency has become increasingly popular in recent years and is quickly becoming an important part of the global financial market. However, many people are unsure about what laws apply to cryptocurrencies and how they can be used. In this blog post, we will briefly discuss the legalities of cryptocurrency.
What is cryptocurrency?
Cryptocurrency is a currency which only exists in digital form and uses cryptography to secure it. Cryptocurrencies are generally decentralised and are therefore perceived to be not subject to UK laws and regulations in the same way as other currencies. The first, and arguably most popular cryptocurrency is Bitcoin, but there are currently more than 10,000 different types of cryptocurrencies available on the market.
The regulations surrounding cryptocurrencies vary from country to country and the UK government has adopted a “wait-and-see” approach when it comes to regulating cryptocurrencies. As such, there is no overarching legal framework governing their use in England and Wales.
Whilst there is no specific cryptocurrency tax in the UK, they are subject to either Capital Gains Tax or Income Tax, just like any other asset or investment. The onus is on investors to familiarise themselves with the applicable tax laws and take advice in respect of any transaction involving cryptocurrency.
Anti-money laundering and know your customer laws
To try and prevent money laundering and other criminal activities associated with cryptocurrencies, the Anti-Money Laundering and Know Your Customer regulations require verification of the identity of customers before engaging in transactions with them.
Cryptocurrency has grown rapidly over the past few years and is now an important part of the global financial system. While its potential applications are exciting, clients need to understand the legalities of using virtual currencies.
The Dispute Resolution team at Chadwick Lawrence are coming across more and more people who are being tricked into investing in cryptocurrency, stocks & shares, and other unregulated investments. Please be careful no matter how tempting it may be – because if something sounds too good to be true then it probably is.
If you have been tricked into investing or require any legal advice in respect of cryptocurrency, stocks & shares, and other unregulated investments including the associated rules and regulations the Dispute Resolution team at Chadwick Lawrence might be able to help. Email us at email@example.com or phone us on 0113 225 8811.