UK tax regulator welcomes crypto service providers with new tax exemption

The tax regulator of the United Kingdom invited crypto service providers operating in its jurisdiction by announcing the inclusion of cryptocurrencies in the tax exemption program.

Her Majesty’s Commissioner of Revenue and Customs (HMRC) has published Legislation defining “specified crypto assets” as qualifying for the Investor Management Exemption (IME) in transactions conducted from 2022 to 2023.

The regulation, which takes effect on January 1, 2023, does not provide a positive definition of “specified crypto asset”. Instead, it refers to an “investment transaction” as defined in the Investment Transactions Regulations of 2014.

UK uses IME as a tool to strengthen its position a financial center, This allows non-UK resident investors to appoint UK-based investment managers who undertake certain investment transactions on their behalf without UK taxation.

“Specified Crypto Assets” shall be deemed to be stocks and other assets governed by UK funds acting on behalf of non-UK investors. HMRC’s decision is in line with the UK government’s FinTech Sector Strategy, which aims to strengthen the country’s position as a financial hub and encourage new cryptocurrency investment management businesses to base themselves in the UK.

However, there are signs of a change in attitude towards the cryptocurrency sector among UK regulators. Ashley Elder, the incoming head of the UK’s Financial Conduct Authority (FCA), recently Guilty for “deliberately evading” cryptocurrency-related businesses and facilitating money laundering.

FCA recently called On MPs to support and create proper modalities for crypto ban.

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