The United Kingdom Is Exploring the Potential of Cryptocurrency Despite Conservativeness from Regulators

When Bitcoin first stepped in the United Kingdom, it was sluggishly welcomed with two hands and people. At first the citizens were reluctant about learning or using Bitcoin since it was still a new technology. But now, the trend of cryptocurrency adoption seems to be growing.

A large population of the British people feared using, investing, transacting or associating with Bitcoin thinking it was a scam or something that couldn’t live to see its 5th birthday or a bubble. But the attitude towards the asset has gradually kept on changing. In 2020, the UK was ranked among the top nations with the biggest BTC trading volumes in the globe. As of today, BTC/USD trading volume on crypto asset exchanges in the UK is standing at more than $5,951,800 USD, according to the data by Statista. Now that Bitcoin is trading like a hot cake, the UK citizens are now fearing not to miss out on the profits that can be generated from this current BTC bull run.

Most of the companies including cryptocurrency exchanges were established in the country to deal in crypto related activities such as sell, buy, advertise or promote Bitcoin and other digital currencies. The UK has access to many large BTC and crypto asset exchanges. Some of the crypto-exchanges operating in the UK include Coinbase, Crypto.com, eToro UK Ltd., CoinJar, Wirex, Solidi & Bittylicious, Coinfloor, Localbitcoins, BeyondCC and many others.

Regulation of crypto assets in the UK

As it stands, all signals are green on crypto asset industry in the UK. The industry is still emerging and the regulators in the country including UK Cryptoassets Taskforce identifies cryptocurrencies as “crypto assets”.

The 2018 Taskforce Report defined and identified cryptoassets in 3 subcategories and that is Exchange tokens, Security tokens and Utility tokens. In the UK, cryptoassets aren’t regarded as money or being equal to fiat currency.

The UK financial watchdogs raised warnings about investment in digital currency, citing harm and risk they pose, and there was a proposal by the FCA to bar the sale, promotion and circulation of derivatives and exchange-traded notes referencing Bitcoin and other crypto assets.

Options, contract for difference (CFDs), futures, and crypto asset-referencing ETNs are not allowed to be sold, purchased, marketed, or circulated in the country when they are unregulated. As per the FCA, “any crypto which is not a security token is an unregulated token”. But this does not mean digital assets are banned – currently, there is no blanket ban on crypto assets in the country, as per the report by CoinIdol, a world blockchain news outlet. It’s not also illegal to sell cryptocurrencies for cash in the country.

The government is doing everything possible to regulate this industry. For instance, the HM Treasury, and FCA issued guidance apropos of digital currencies to all retail users. In the UK, any sale of crypto assets is subject to Capital Gains Tax (CGT) and every different crypto asset is seen as a separate CGT asset.

The future of virtual currency in the UK

The UK is among the nations that are studying the potential of central bank digital currency (CBDC). The country wants to create a well-designed CBDC so as to receive a swift uptake of digital pound both internationally and domestically.

The central bank of England is considering allowing the citizens and companies to pay bills or taxes using CBDC and is still finding ways of allowing the commercial banks to convert the CBDC into GBP. From the look of things, the launch of the digital GBP is more likely to contribute to the breakdown of some of the powerful cryptocurrencies such as BTC, Ethereum, XRP and others.