Archive for Business

Taxation of cryptocurrency profits

If you have profited from crypto currency you may be liable to tax, depending on what activities you are undertaking – buying/selling/exchanging, trading, investing, mining, payment processing.

  • VAT
  • Corporation Tax (CT)
  • Income Tax (IT)
  • Capital Gains Tax (CGT)

as set out in this link.

HM Revenue and Customs tax treatment of income received from Bitcoin and other cryptocurrencies 2014

For more information contact Lennards Chartered Accountants 

Cyber secure your Cyber currency

Do you protect your actual wallet containing your hard earned cash, credit cards and ID?

If you’re happy speculating on cryptocurrency with the same carefree financial attitude you have to gambling away on bet366, casinoroyale or pokerface then this opinion article probably isn’t for you.

Crypto currency is stored in an electronic wallet.  If that’s on your personal computer, usb drive or external drive -a cold wallet -then apply the 10 steps to cyber security – passwords, firewalls, anti malware (you don’t want someone encrypting your crypto!) and backups you can actually get back and no-one else has access to.

You can go as far as writing down your private key codes and storing them in a safe / bank vault.

You most likely will use a crypto currency exchange.  They hold your money like a regulated broker would hold your shares. There are many around and you should evaluate them before entrusting your cash to them

  • What are the transaction costs – you will pay them a commission every time you buy or sell cryptocurrency to them
  • What are their buy/sell prices like, bit like airport currency exchange rates are notoriously bad even if the commission rates they also deduct are reasonable
  • Find independent online reviews as to how easy others find them to use.
  • Difficulty creating an online account in the first place can be a red flag – do they use a 2 factor login?
  • How fast are transactions processed – times of hours and you could miss the boat if you need to bail out or pile in quickly
  • How many real currencies can you trade in / out of, you may loose money by converting GPB to USD first and then into crypto.
  • How many different crypto-currencies can you deal in?
  • How do you access your online wallet – Windows, Android, Mac, IOs?
  • Try and assess security around their website (https) and backoffice servers and systems – do they follow the 10 steps or have any ISO certification
  • Have they already been subject to any data breaches/hacks?
  • What happens if your crypto is stolen, is there any recompense or insurance?
  • What is uptime and availability, what if the exchange/website goes down through traffic volumes when you need to buy/sell quickly?
  • Do they allow peer to peer trading where buyers and sellers are matched to each other, a little like transferwise.com for ‘proper’ currencies

As a final observation the FCA (Financial Conduct Authority) have rejected Bitcoin’s description as a currency, instead treats it as a commodity which they do not regulate. (Dec 2017)

Crypto Crazy

It’s all against crypto this last few months:

Europol: Criminals hide billions in crypto cash.  bbc news

Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says msn.com

Beginning 2018 in USA, all cyptocurrency transactions are taxable, including the exchange of one cryptocurrency for another. US tax reform bill

China central bank bans cryptocurrency fund raising. China morning post

Facebook has said it will block any advertising promoting crypto-currency products and services. bbc news

Lloyds banking group bans bitcoin purchases on their credit cards to stop people running up debt.  bbc news

Japanese regulators raid Coincheck in wake of $530 million crypto heist. https://www.cnbc.com

UK Treasury: We also intend to update regulation to bring virtual currency exchange platforms into anti-money laundering and counter-terrorist financing regulation. (Dec 2017) cnn.com

Bitcoin Mining Now Consuming More Electricity Than 159 Countries  https://powercompare.co.uk/bitcoin/

Thugs break into house to force bitcoin transfer at gunpoint  http://www.bbc.co.uk/news

Company Halts ICO After SEC Raises Registration Concerns.  Munchee had been seeking to raise $15m to create an “ecosystem” where Munchee and others could buy and sell goods and services using the tokens. https://www.sec.gov

“The Indian government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” https://qz.com/

Russia’s Finance Minister says: “I don’t believe that the future belongs to the bitcoin. The future belongs to the blockchain technology.  express news

In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and Ether, two of the most popular digital currencies, according to Lex Sokolin, global director of fintech strategy at Autonomous Research LLP.Latest here is Nicehash, Dec2017 https://www.insurancejournal.com

Bitcoin’s price sinks as South Korea bans anonymous crypto trading. (28/12/17) reuters news

Andrew Bailey, the head of the Financial Conduct Authority, repeated calls that investors should be prepared to lose everything if they buy bitcoin. Dec 2017  bbc.co.uk