By
Tolu Ajiboye
April 17th, 2024
The UK will extend its crypto tax break as part of a broader financial reform package to increase the country’s crypto profile.
The United Kingdom (UK) has stated that it would extend its crypto tax break for investment managers via financial reforms. According to Prime Minister Rishi Sunak, this move is part of the country’s broader plan to become a digital currency hub. Sunak’s administration has already legislated for stablecoin usage in payments and the British politician is angling for more investments in crypto businesses.
Economic Secretary to the Treasury Andrew Griffith also expressed a desire to leverage crypto tentatively. Although he noted that there were consumer and financial stability risks to consider, Griffith said:
“Certain crypto assets and distributed ledger technology could drive transformational changes in financial markets.”
Delineating a suggested strategy on how to approach digital currency opportunities cautiously, the Treasury’s Economic Secretary added:
“The government’s position is to start with those most stable, least volatile coins likely to be used by intermediaries as a settlement currency and then we will go forward and consult from there.”
More on UK Crypto Tax Break & Other Related Fiscal Laws
The financial services reform package released today may replace the laws of the European Union banking and financial market. In addition to revamping the UK’s financial sector, this 30-point reform package would also extend an existing tax break to the crypto sector. The tax break mentioned above lets investors deploy the services of a UK-based manager without the need for additional tax liability.
In addition to the UK crypto tax break, the country’s Treasury department also revealed plans to implement a “sandbox”. This initiative will test-run innovative financial market infrastructures in 2023, including ease of applicability and sustainability. The government’s Financial Markets Infrastructure Sandbox would also allow firms to experiment with decentralized tech in a regulated bubble.
The UK seeks to ensure consumer protection from emerging technologies and would reform its 1974 Consumer Credit Act. This update tailors toward encouraging innovation while reducing expenses.
Furthermore, the UK’s Chancellor of the Exchequer, Jeremy Hunt, also said that his team would consult on digital pound issuance in the coming weeks. The British government’s update on a potential central bank digital currency (CBDC) comes amid several other CBDC projects across the globe. Furthermore, all previously mentioned fiscal efforts undertaken by the British government are geared towards boosting economic growth post-Brexit.
Sunak has been vocal about his plans to increase the UK’s global crypto visibility, despite some concerns regarding implementation. However, Griffith previously promised a consultation on how to deploy the Financial Services and Markets Bill’s new legislative crypto powers soon enough. Such a strategy could also entail encouraging international investors to transfer their funds to the UK’s crypto industry.
The Crypto Age
As digital currencies begin to make inroads into the mainstream financial landscape, calls for structured oversight are also intensifying. Several countries across the globe, most notably the United States, are at various stages of instituting comprehensive governing crypto laws. These laws seek to improve accountability and protect customers because crypto remains a volatile asset despite its surging popularity.