Recent Shifts In UK’s Crypto Regulations

As the cryptocurrency market continues to grow, the UK is not standing by idly. It is joining other countries around the world to ensure that the industry is well-regulated. Both for the investors’ protection and the greater financial system’s stability. The recent updates to cryptocurrency regulations by the UK’s major governing bodies provide further clarity about the future of the industry in the country.

UK’s Financial Conduct Authority (FCA) and Cryptocurrencies

The FCA, the UK’s financial watchdog, raised eyebrows in early 2021 when it issued a stark warning about the risks associated with investing in cryptocurrencies. The authority is concerned about the high price volatility of cryptocurrencies, the complexity of the products offered, and the lack of customer protection. This warning came after the FCA put a ban on the sale of derivatives that reference certain types of crypto assets to retail consumers.

HM Revenue and Customs (HMRC) Crypto-assets Manual

In a bid to provide clearer tax guidance for businesses and individuals who deal in crypto assets, the HMRC published its Crypto-assets Manual. The manual confirms that cryptocurrencies like Bitcoin are considered as “crypto assets” for tax purposes in the UK and are not currency or money. It provides detailed guidance on how the UK’s tax laws apply to transactions involving crypto assets. This guidance covers income tax, corporation tax, capital gains tax, inheritance tax and VAT.

• Income Tax: Where activities amount to a trade, income will be taxable under trading income rules.
• Corporation Tax: Companies will have to pay tax on the profits made from buying and selling cryptocurrencies.
• Capital Gains Tax: Individuals must pay capital gains tax on any profit made from the disposal of their cryptocurrencies.
• Inheritance Tax: Cryptocurrencies are considered part of an individual’s estate when they die, subject to inheritance tax.
• VAT: According to the HMRC, in most cases, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for cryptocurrencies.

How These Updates Affect Crypto Traders

The new regulations have major implications for anyone involved in cryptocurrency trading and investment within the UK. It’s important for traders to be aware of these changes – particularly the tax implications on profits derived from trading. Crypto traders need to keep a thorough record of all their transactions for tax purposes.

Platforms like 3Commas and Cornix, which offer automated crypto trading tools, can help traders keep track of their transactions. These platforms provide extensive trading history and analytics features to assist traders in effectively managing their trades. They also offer other useful features such as copy trading and signal trading, which can be advantageous for both new and seasoned traders.

Comparing 3Commas and Cornix for UK Traders

3Commas is a sophisticated trading bot that supports a wide range of exchanges. It allows you to automate your trades by copying the strategies of expert traders using its ‘Social Trading’ feature. It also offers ‘Smart Trading’, including stop loss and take profit orders, concurrently, a feature not typically found on crypto exchanges.

On the other hand, Cornix is a simpler and more affordable bot that caters to beginner traders. The platform’s main selling point is its telegram integration, allowing users to execute trades directly from Telegram. However, it supports fewer exchanges compared to 3Commas and lacks some advanced features.

Whether you choose 3Commas or Cornix, you will have to ensure that you comply with the new UK regulation updates. A well-regulated crypto market is good for traders, as it reduces the risks of fraud and brings more legitimacy to the industry.