November 28, 2021

The UK will extend a 2% digital tax to bitcoin exchanges

The UK will extend a 2% digital tax to bitcoin exchanges

The UK Ministry of Revenue and Customs (HMRC) has ordered licensed cryptocurrency exchanges to pay a tax on digital services with a rate of 2%. Customers of the platforms could face higher fees, the self-regulatory organization CryptoUK warned, writes The Telegraph.

The digital tax, introduced in April 2020, initially applied to operators of social networks, marketplaces and search engines.

There is a wide variety of crypto-assets. They do not represent commodities, financial contracts or money. For this reason, bitcoin exchanges can hardly take advantage of the tax exemption provided for online financial marketplaces, the service explained.

CryptoUK called HMRC's action unfair and pointed to the risks of shifting costs to traders and investors.

CEO Ian Taylor saw the decision as a severe blow to the industry after the FCA introduced a complicated licensing system. Starting in January, all cryptostartups are required to comply with AML rules and register with the Authority.

As a reminder, in December 2020, the FCA introduced a temporary registration regime for cryptocurrency companies awaiting regulatory approval. It was supposed to last until July 9, 2021.

In June 2021, the agency extended the regime until March 31, 2022. The FCA felt the initiative would allow companies in the digital asset industry to continue operating while the agency "conducts a thorough assessment."

In July, the HRMC began collecting information on customers of foreign cryptocurrency exchanges from foreign fiscal agencies.

Jack Evans

About the author

I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments. 

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