UK Cryptoassets Update

5 Apr 2022

UK Government sets out plans to create a global cryptoasset technology hub.

Following the less than welcome DeFi lending and staking update on 2 February this year, on 4 April the Government laid out its intentions to make the UK a leading cryptoasset technology hub. But is this more unwelcome news?

The strategic measures they intend to focus on are:

  • Recognising the use of stablecoins as a form of payment. This could make paying your crypto taxes more efficient, so long as the DeFi loan rules are changed!
  • Creating a series of measures that will help make the UK a global hub for cryptoasset technology and investment. This presumably means making tax-breaks attractive to DAO’s and the crypto coding community as a whole.
  • One of these measures is legislating for a ‘financial market infrastructure sandbox’ to help firms experiment and innovate. This sounds promising, but the devil will be in the detail.
  • Working with the Royal Mint on an NFT as an emblem of the forward-looking approach the UK is determined to take.
  • Forming a cryptoasset engagement group to work more closely with industry. So long as the group is diverse and from all corners of the crypto world, this can only be a good thing.
  • Exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market. It will review how Defi Lending and Staking activity will be treated for tax purposes, presumably in recognition that the 2 Feb 2022 update was ill-advised (we can only hope).
  • Asking the Law Commission to consider the legal status of DAOs.
  • Consulting on extending the scope of the Investment Manager Exemption to include cryptoassets. To the every-day investor, this is likely to be unwelcome news, as it means the large financial players can start to influence the markets.

The update is of course a high level overview and the Government’s attempt to show they are taking crypto seriously. It’s a mixed bag of information, so let’s see where this takes us. With that said don’t 'HODL' your breath!

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