In the UK, Bitcoin is equated with private money. The British authorities consider crypto instruments to be a combination of numbers obtained by a mathematical calculation and do not apply the Anti-Money Laundering Act to them.
The national regulator FCA licenses the non-fiat currency exchange business, adhering to the position of the Bank of England and the authorities. They actively explore blockchain technologies, accept payment crypto-solutions as an inevitable future, and even provide blockchain startups with state support. The license for the cryptocurrency exchange in the UK is issued (exchanges, exchangers, etc.), though the legislative regulation of the digital business is still in its infancy. Profit received from cryptocurrency transactions is subject to a standard capital gains taxation (VAT), as in the United States.
The legal status of cryptoassets in the UK
Relevant government authorities define as cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored, or traded electronically. Local regulators distinguish among such assets the following types:
- crypto exchange tokens are used as a means of payment and can be an object of investment regarding an increase in their value;
- utility tokens that provide access to goods or services on a particular platform;
- security tokens that give the right to participate in the business, such as ownership, payment of a certain amount of money or the right to receive a part of future profits;
- stablecoins which are supported by fiat currency/precious metals and thus are characterized by a lower level of volatility.
What should be done to get cryptocurrency exchange license in the UK
To get cryptocurrency exchange license in the UK, you need:
- to register a legal entity (with a real office) to which the existing taxation rules are applied – when exchanging cryptocurrencies companies pay a corporate tax, but VAT, like during mining, is not introduced for them;
- to open bank accounts for operations and cryptocurrency transactions;
- to prove that the company complies with the requirements of anti-money laundering and terrorism financing prevention legislation – the British Treasury offered to apply it to the business that opens client accounts in cryptocurrency and converts it into fiat currencies;
- to prepare a package of documents for obtaining a license for the cryptocurrencies exchange – with a description of risks, a business plan, policies according to AML/KYC legislation, etc.
Cryptocurrency exchange license in the UK, as well as further operations with crypto-assets, requires the company-holder to comply with the mandatory requirements of the legislation aimed at combating money laundering and terrorism financing. Among other things, you need to do the following:
- to assess the risks of operations with crypto assets, evaluating the following parameters:
- countries and geographic regions for operations;
- services and products;
- the nature of the operations;
- delivery channels.
- to develop policies for managing and reducing the risks of money laundering and financing of terrorism, record keeping of all changes to such policies, as well as inform clients about them;
- to appoint a person responsible for compliance with policies in the field of combating money laundering and the financing of terrorism;
- to monitor employees whose work is related to the implementation of policies in the field of combating money laundering and the financing of terrorism;
- to establish the identity of each customer according to a standard, simplified or detailed procedure on the basis of riskiness level of transactions with him;
- to identify politically exposed persons;
- to implement an internal audit function and monitor its implementation on an ongoing basis;
- record keeping of all counterparties and transactions;
- to report on the general procedure, as well as in cases of detection of transactions related to money laundering and the financing of terrorism;
- to educate employees responsible for the compliance of the company’s activities with applicable laws and internal policies.
Professional support from “Prifinance”
The legal regulatory framework is not fully formed, so entrepreneurs who are licensed to cryptocurrencies or performing ICOs are trying to protect themselves and take into account all possible requirements to the beneficiaries, founders, directors, and staff of the organization. By contacting “Prifinance”, you can minimize the risks, time and money losses. Our company will help to register a legal entity, obtain a license for cryptocurrency, open an account and deploy a legal, promising business. We will select the tax model and provide organizational and legal support.