When it comes to digital assets, the UK is no different. This technology has been growing rapidly similar to other parts of the world. It has been speedy to respond to this growing trend with a comprehensive set of regulations.
For traders, it’s important to deeply understand crypto regulations since they’ll allow them to make wise decisions. These decisions can easily turn into increased earnings. This article covers key UK crypto regulations. Read on to learn how they impact trading.
UK’s Legal Status of Cryptocurrencies
The digital assets’ regulation has developed alongside the evolution of the innovation. In 2009, everything started. This is when the first crypto was conceived. The regulations have been balancing between maintaining financial stability and protecting traders. Some key developments are:
- In 2018, the digital asset task force brought together the Financial Conduct Authority, the Bank of England and HM Treasury to coordinate the United Kingdom’s approach to regulating cryptocurrencies and distributed ledger technology.
- In 2022, the government expressed its intention to make the United Kingdom a worldwide hub for digital assets technology.
- In 2023, the HM Treasury released a consultation paper and call for the evidence on future financial services.
Cryptocurrency trading is lawful. It’s well-regulated by various UK regulatory bodies, including:
- The Financial Conduct Authority
- Prudential Regulation Authority
Key Regulations to Know
You need to know some key crypto regulations in the UK. They include:
Anti-Money Laundering
In the crypto world illegal activities are numerous. AML regulations are measures created to prevent, these activities, which include:
- Terrorist financing
- Money laundering
- Fraud
- Tax evasion
The main purpose of AML is to monitor and report suspicious activities that try to disguise the use and presence of illegal crypto assets. Exchanges comply with AML by monitoring customer transactions for any suspicious activity that might indicate money laundering and other associated crimes and report them on time.
Know Your Customer
KYC requires trading platforms to identify and verify their customers via reliance and independent resources of documents, information, or data. KYC in crypto is vital as it helps reduce the risk of criminal activity such as AML and terrorist financing. Also, it helps eliminate identity scams and theft.
Taxation
Earnings made from disposing or selling digital assets are subject to Capital Gains that range between 10% and 20%. Income received from digital assets is subject to Income Tax that ranges between 20% and 45%. It’s vital to keep accurate records. They are a requirement of any trader or investor to send a self-assessment tax return to HMRC.
Choosing a Compliant Exchange
You need to pick compliant crypto platforms for day trading or swing trading, depending on your strategy. The criteria for choosing a regulated and compliant exchange include:
- Regulation and licensing: Pick a platform that is regulated and licensed by FCA.
- Security features: Find exchanges that have strong security measures in place.
- User experience: Look for things like ease of use, trading features, and customer support.
For traders who are actively involved in day trading and looking for the best crypto platforms for day trading, the six exchanges to pick from are Gate.io, PrimeXBT, Binance, BYDFi, Phemex, and Bybit.
Conclusion
Understanding and complying with UK crypto regulations allows you to make wise decisions and elevate your trading experience. You’ll also avoid platforms that aren’t regulated since they are designed to steal your hard-earned cash. Always trade on recommended platforms.