Authorities in the UK have stepped up their approach to cryptocurrency and blockchain technology, with plans for new regulation by early 2019, according to a report published this week.
Published by the UK government’s Cryptoassets Taskforce, which includes representatives from the Bank of England, HM Treasury and the Financial Conduct Authority, the report says there are significant benefits to industry from blockchain – the underlying technology behind cryptocurrencies like bitcoin.
As a result, the report says that policy should “encourage responsible development of legitimate DLT and cryptoasset-related activity in the UK.”
“While the authorities’ immediate priority is to mitigate the risks associated with the current generation of cryptoassets, the Taskforce considers that other applications of DLT have the potential to deliver significant benefits in both financial services and other sectors. The authorities do not believe there are regulatory barriers to further adoption of DLT.”
The report continued, examining in particular tax issues around cryptocurrencies, which the Taskforce expects to be updated over the next few months.
“HM Treasury is working closely with HM Revenue and Customs to consider the tax issues raised by cryptoassets…Current guidance on the tax treatment of cryptoassets is set out on HMRC’s website. HMRC will further update their guidance by early 2019, drawing on the Taskforce’s work.”
The report also examined initial coin offerings, the nascent funding model some companies have used to raise money from investors, while providing on-chain utility for their backers in the form of custom tokens and cryptocurrencies.
“The government will issue a consultation in early 2019 to further explore with the industry whether there are examples of such cryptoassets on the UK market and, if so, whether an extension of the regulatory perimeter is required.”
The development comes at a time of a wider push towards regulation in the cryptocurrency sector, with governments increasingly live to the need for updated legal frameworks for investors and cryptocurrency businesses.
As cryptocurrencies like bitcoin become ever more mainstream, measures similar to those being taken in the UK are expected across the world, as regulators sharpen up to the demands for more oversight.