In spite of the rapid ascent of the world’s leading digital currency, there remains no regulatory legislation in the place in Britain. In this post, we are going to investigate the complexities of constructing an adequate regulatory framework for digital currency, in five stages.
1. The Lack of Crypto Regulation in the UK
The first is simply to acknowledge the increasing the void left by the UK’s lack of crypto regulations. In 2018, HMRC issued guidance in terms of a letter concerned to VAT, reading that Bitcoin was to be treated as a single-purpose face-value voucher. Well, this meant that anyone selling Bitcoin would need to charge VAT on the value of BTC being traded.
However, HMRC quietly withdrew this guidance and is currently re-examining how and when VAT should be applied.
2. The Nature of Bitcoin
This point regards the speculative and strange nature of the digital currency. Bitcoin’s emergence involves an anonymous creator, complex mathematics and billions of pounds of electronic cash circulating in the subterranean international financial system.
3. The Compliance Problem
This point regards the problem of enforcing compliance. The immense digital security of digital currency is counteracted from the perspective of regulators by the immensely problematic cloak of anonymity.
Though all BTC transactions are recorded on a universally-visible shared ledger, they are challenging to track as when bitcoins are placed in customers’ digital wallets. With no way of identifying an individual Bitcoin unit, the trailing of bitcoins and successfully pursuing the owner of a wallet is almost impossible.
4. Global Regulatory Responses
The fourth point regards the significance of regulatory frameworks for including Bitcoin and other digital forms of currencies becoming highly apparent in foreign countries.
In the US, several government agencies have been tasked to make sure that Bitcoin transactions are undertaken within the law. However, a Florida court ruled last year that Bitcoin need not be classified as money.
5. New Legislation
The UK’s distinct absence of regulation or judgements, following this international response, defining the status of Distributed Ledger Technology is brought into sharper focus. Since digital currencies like Bitcoin continue to increase in their value and legitimacy, Britain’s head-in-the-sand approach can’t be maintained. Probably, it will take a string of high-profile litigation cases, such as that following the $450m collapse of Mt. Gox in the year 2014, a leading bitcoin exchange. However, it is unwise to wait for a catastrophe.
Regardless of the rapidly changing face of digital currency, preparations need to be made!