CryptoAsset Taskforce’ Report Urges Authorities To Explore Additional Taxing Protocols
Multiple regulatory steps regarding distributed ledger technology and crypto assets have been published in the final version of the UK’s “Cryptoasset Taskforce” report, which came out on Monday. This information revealed that the technology involved with such assets could easily benefit the rest of the financial industry, along with other industries. This task force is made up of the HM Treasury, Financial Conduct Authority, and the Bank of England.
The group plans to “encourage responsible development of legitimate DLT and cryptoasset-related activity in the UK.” However, the report went on, saying,
“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 added, “However, the technology requires further development before it could be used at scale and before these opportunities could be realized.”
Some of the actions that are coming up include the alterations to the way that cryptocurrency investors would have to pay their taxes. Right now, the topic is outside of what the report covers, but it says,
“HM Treasury is working closely with HM Revenue and Customs to consider the tax issues raised by cryptoassets.”
The report also notes,
“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.”
Right now, the UK also has some steps in process that would make it easier to develop formal rules that govern initial coin offerings that are hosted locally. On this issue, the report says,
“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 report goes on, noting that the government will take the proper actions to reduce the risk that investors face, while also stopping cryptocurrency from being involved in illegal activity to the best of their ability. The group understands that the actual involvement in criminal circles, though there is still a risk. However, the bigger risk seems to be the potential loss they could experience with market manipulation, which is found more commonly with exchanges.
Essentially, this report urges regulators to clarify the required framework involving security tokens, ICOs, and financial instruments involved with cryptocurrency. The current plan is that the task force will come together again in six months “to consider developments and review the UK’s approach.”
Preston Byrne, an independent consultant and ASI fellow, took to Twitter as soon as this report came out, letting his followers know that he would be commenting as he read along. Reading the full report for the next hour, his profile was filled with thread of his comments. He criticized the report at the start, saying,
“FCA talks about “distribution” and “decentralization” as the two main design choices. I disagree with this/this is not software lingo; “run node,” “read,” “write” and “consensus” perhaps more appropriate. Nothing that can't be fixed, but an inauspicious start.”
The thread continued, talking about all of the changes that are supposed to be implemented. However, he ultimately commented that the new regulations in the UK for crypto industry will lead wallet providers and exchanges to need to start trying to appease to FCA offices to stick around.