Often shortened to just ‘crypto’, cryptocurrency is a digital or virtual currency that’s secured by cryptography. What’s more, because they’re not issued by any central bank, cryptocurrencies are also theoretically immune to government interference or manipulation. Digital currency platforms have grown to become a sizable sector of the UK economy. Senior executives at the top of the business now face prosecution for failure to file the company’s accounts on time. Our view is that crypto is going to impact many different sectors – including financial services.
Even if you have no plans to make big crypto investments, you owe it to your company’s future to keep track of this new world for financial services, data analytics and virtual investments. The boom includes companies creating the foundation for Web 3.0 and the crypto economy. These investments began to scale in April 2021, when cryptocurrency exchange Coinbase held an Initial Public Offering (IPO). Following this success, capital began to pour into startups which, like Coinbase, are building the foundations of a new digital economy that runs on cryptocurrencies. Crypto M&A rose to $55 billion in 2021 compared to $1.1 billion in 2020 — an increase of nearly 5000% — according to PwC’s Global Cryptocurrency M&A and Fundraising Report. By providing tools for inventory management, order tracking, and customer support, Coinbase Commerce simplifies the process of integrating crypto payments into existing business operations.
Several jurisdictions are developing regulatory frameworks, with the EU introducing a comprehensive regime and countries like the UAE and Hong Kong implementing licensing systems. The regulatory situation in the US remains uncertain, though there are hopes for federal legislation in 2025. Meanwhile, central banks are diverging in their approaches to retail CBDCs, with some countries launching them and others seeing less immediate need. Meanwhile, the implementation of the BCBS’s international standard on the prudential treatment of cryptoasset exposures which is set for the end of 2025, could impact a broad range of tokenisation projects (see trend 5). Central banks are also exploring new technologies for wholesale central bank money settlement, with the Bank of England expected to begin its program in 2025.
SDRT would apply if cryptocurrency is used as payment for assets within the scope of the tax, as SDRT applies if payment is made in “money’s worth”. Where cryptocurrency is disposed of the tax rules which bitcoin era also apply to shares are applied. The gain or loss is equal to the disposal proceeds less the base cost of the cryptocurrency. The proceeds are usually the sterling cash received, or the sterling value of any asset received in exchange for the cryptocurrency (e.g. where bitcoin is exchanged for ethereum, the sterling value of the ethereum tokens is used). Despite the name, HMRC do not consider cryptocurrency to be currency or money, nor does HMRC consider the buying and selling of cryptoassets to be the same as gambling.
Securities & Exchange Commission (‘SEC’), Commodity Futures Trading Commission (‘CFTC’), Internal Revenue Service (‘IRS’), and Department of Justice (‘DOJ’), the Monetary Authority of Singapore, the UK Financial Conduct Authority (‘FCA’), and many more. There can be limited visibility into the structure and ownership of crypto businesses. This raises audit risks around governance and decision-making; ownership, control and location of assets; and an increased susceptibility to fraud. The risks are heightened if parts of the business are sited in jurisdictions that lack strong legal and regulatory frameworks. Indeed, the crypto firm may well be in such jurisdictions to avoid any scrutiny of – or control over – its activities.
While managers may call out for larger teams to help with the workload, it is vital to make sure that a hiring strategy is sustainable and considered. The crypto exchange company is removing 20% of its positions which equates to 170 employees. Business Insider has estimated that crypto exchange companies have laid off an accumulative 1,700 employees in the last month. As a result of this decline in value, crypto companies have seen a stark impact on their headcounts. Not only was the value of established currencies like Bitcoin soaring, but a new cryptocurrency was crawling out of the woodwork every other week. Our website will give you a flavour of the advice we provide – if you would like to talk to us for more information, please contact our client services team who will be happy to assist.
Ether lost almost 90% of its value between December 2017 and December 2018, while solana shed more than half its value between November 2021 and January 2022. Ether has experienced sharp spikes and tumbles in its price as enthusiasts speculated on a wide variety of applications for the ethereum blockchain. Since January 2021, though, ether has hovered consistently between 15% and 20% of the market, while bitcoin’s market share has continued to steadily decline from 70% to close to 40%, even as it posted a cumulative 32% return. If you are not yet a SmartSearch customer, contact us today to find out how our easy-to-use electronic verification platform can help you get compliant and stay compliant, saving you time, money and an awful lot of stress. SmartSearch uses triple bureau data (cross referencing the customers details using three global data sources) and screens for sanctions and PEPs all in one easy check, with the results delivered in a matter of seconds. While the vast majority of crypto firms are not running checks on all new customers, of the ones that are, many are using inadequate methods.
Also, by the end of Q4 2020, the cumulative funding amount rose to $14.3billion globally. To make a claim, contact our dedicated in-house cybersecurity insurance claims team. They are equipped to adjust claims of any size or complexity, ensuring a smooth and transparent process for our clients. The crypto market has seen a significant resurgence, with Bitcoin’s price more than doubled in 2024, exceeding US$100,000 for the first time. Crypto ETFs also gained traction, highlighting sustained demand among retail and institutional investors despite past volatility. HMRC have started to actively enquire and are working with many well-known Crypto platforms and exchanges to ascertain who may have tax to pay on their Cryptoassets.