U.K.-based crypto exchanges will now have to pay a new digital service tax after an update to the regulations for Her Majesty’s Revenue and Customers (HMRC), a report from Finbold says.
The tax was debuted in April as a method of getting big tech companies to pay the right amount.
The exchanges won’t qualify for an exemption to financial markets, as the HMRC doesn’t recognize digital assets as financial instruments.
The world has been reckoning as of late with the general mode of how crypto is to be treated moving forward. HMRC has said that, because bitcoin and other crypto doesn’t represent money or financial contracts, exchanges won’t gain anything from the exemption for online financial markets.
The idea of paying a digital service tax, too, has been met with animosity – Ian Taylor, CryptoUK director, called the move “regressive.” He said the laws of the Financial Conduct Authority, as well, would be harmful.
U.K. regulators have been undergoing a trend of harshness toward crypto exchanges – including banning Binance from the U.K. for its inefficient anti-money-laundering rules.
The newest laws just add to the pile which the report calls “murky,” in that there aren’t any taxes on crypto assets in the U.K. — and anyone holding them as a personal investment will face capital gains taxes on their earnings.
PYMNTS reports that Bank of England governor Andrew Bailey has blamed crypto on a new spate of illicit activity.
He said he thinks the new digital mode of payment “is providing another means of payment for people who want to conduct criminal activity.”
Other big names in finance have echoed the concerns. J.P. Morgan CEO Jamie Dimon has said there inevitably would be more crypto regulations and that digital assets “can be real,” and that government would, as such, regulate them.
“No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, government’s going to regulate it,” Dimon said.