By Michael Scott
The UK’s government commitment to converting the country to a global crypto hub was evident as Prime Minister Rishi Sunak extended crypto tax breaks to boost the uptake of digital assets.
Crypto Tax Breaks Retained
The announcement to retain crypto tax breaks for an extended period echoes Minister Andrew Griffith’s promise in October that the UK will tentatively seize opportunities emerging within the crypto space. In his address, Griffith was optimistic about consulting on how best to utilize the legislative crypto powers provided for in the Financial Services and Markets Bill in December.
The extended tax breaks granted to investment managers dealing in crypto assets constitute the financial services reforms package unveiled to replace the EU laws on banking and the financial market.
Measures to Make UK Attractive to Crypto Investors
The Treasury representative present during the unveiling event confirmed that retaining the existing tax break enables investors to utilize UK-based managers without incurring additional tax liabilities. The move makes the UK attractive for global and regional crypto investors alongside crucial players in the blockchain and Web3 ecosystems. However, the Treasury official indicated the UK would affect the changes announced by approving new regulations this month.
Meanwhile, the UK disclosed plans to implement a sandbox that it will utilize to experiment on the viability of launching innovative infrastructure to enhance the financial market. The Treasury confirmed consulting on establishing a digital pound as part of the crypto projects scheduled for next year.
Prime Minister Sunak’s Efforts to Ease Crypto Operations
Retaining the existing tax break echoes Rishi Sunak’s speech in April about the desire to convert the UK’s current crypto operations to a global hub. The speech made while Sunak was serving as the finance minister promised to lay a fundamental framework that will ensure regulatory compliance from crypto firms operating in the UK.
Sunak’s efforts are visible in the Financial Conduct Authority’s tentative guideline on utilizing crypto powers proposed under the financial services reform package. Critics have alleged the UK regulator could impose an unduly burden on the crypto firms. In particular, they allege that implementing the new advertising guideline will prove complex for small-sized crypto firms. Lastly, crypto advocates are concerned that the UK regulator could utilize the powers to introduce restrictive requirements capable of strangling attractive opportunities.