While traditional markets are reeling from Brexit, how much of an impact will it have on the Bitcoin industry, such as UK Bitcoin exchanges, who may face new regulatory guidelines when dealing with EU customers? Moreover, how will this historic vote affect taxation of virtual currency?
Shaking Up the Bitcoin Landscape
Now that the United Kingdom will no longer be a part of the EU, there will undoubtedly be some significant changes. Especially in the field of legislation and regulation, things may look very different in a year from now. Bitcoin exchanges in the region will be among the first to feel the effect of any impending changes.
Coincorner is one of the only Bitcoin exchanges in the United Kingdom allowing customers to buy cryptocurrency with their credit or debit card. The company also welcomes European users, but now that the UK separated itself from the EU, it remains to be seen how these transfers will be handled.
CoinCorner Co-founder Charlie Woolnough told Bitcoin.com that:
“We’ve long been believers that having 5% of personal net worth in Bitcoin was potentially a good hedge against wider global uncertainties and, more specifically, Brexit. Our belief has proved well founded. On business level, CoinCorner is located in the Isle of Man which was never part of the EU to begin with. As such, we have the advantage that its very much ‘business as usual’ for us. Indeed, CoinCorner has seen record trading volumes, a noticeable increase in fiat deposits and an increase in the size of bitcoin purchase orders in the run up to Brexit. On speaking to clients we have become aware that many of our new clients would previously have sought refuge from turbulent markets in gold but have now begun experimenting with bitcoin as an alternative store of value.”
The same can be said for Coinfloor, Bitbargain, and Bittylicious, all of which are active in the United Kingdom. Though these platforms are mostly focused on the UK region, they may nonetheless face new regulatory requirements as well. The situation remains very uncertain for the time being, as the full effects of the Brexit have yet to become apparent to the world.
The impact #Brexit is having on Bitcoin.
— StockTwits (@StockTwits) June 14, 2016
On the flipside, all of these exchanges may see an influx from users looking to obtain Bitcoin in the coming days and weeks. As the Pound Sterling continues to lose value compared to other world currencies, consumers may start to look for safe haven alternatives. Bitcoin is an investment vehicle for some, and the value is holding strong in both BTC and GBP markets. In fact, the Brexit may spark renewed interest in cryptocurrency as a whole.
Taxation of Bitcoin in the UK
For as long as the UK was part of the EU, taxation of Bitcoin would fall under the same guidelines as the rest of Europe. In 2015, the European Union decided not to tax Bitcoin, and that situation remains unchanged to date. But things are a bit different in the UK, as there is a decree that would see Bitcoin transactions taxed by as much as 20%.
The Library of Congress website states:
While bitcoins are not regulated, it has been reported that Her Majesty’s Revenue and Customs has classed bitcoins as ‘single purpose vouchers,’ rendering any sales of them liable to a value-added tax of 10–20%. This has been strongly criticized by those selling bitcoins as being a show stopper for the UK Bitcoin industry. There is no specific reference on Her Majesty’s Revenue and Customs site to bitcoins.
Whether or not the UK government will decide to enforce this rule in the future, is anybody’s guess right now. There is room for them to tax Bitcoin if they want to do so, though, which is rather disconcerting. Exciting times are ahead for the UK as a whole, and it remains to be seen which role Bitcoin will play in the coming months.
How will the Brexit affect UK Bitcoin exchanges and taxation rules for cryptocurrency? Let us know in the comments below!
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