The legality of cryptocurrencies varies from territory to territory. The UK especially leans towards crypto mining and trading as well as blockchain development but will get under the skin of illegal miners.
The UK is ahead of the curve in European fintech
The UK is one of the most forward-thinking countries as far as cryptocurrencies and blockchain technology are concerned. Its capital, the city of London, has even been considered Europe’s blockchain hub. Typically, the UK’s government regulation allows people to buy and sell cryptocurrencies without any problem until recently when it banned the trading of cryptocurrency derivatives.
Also, the UK’s fintech industry is growing faster than anywhere else in the world, according to CoinIdol, a world blockchain news outlet. For example, just at the onset of covid-19, at least £50 billion was poured into the fintech sector. Currently, London is exploring the potential of a Central Bank Digital Currency (CBDC) issued and managed by the Bank of England to catch up with the leading countries in this area like China. Thinking of travelling to the UK but not sure whether or not you would dine at a restaurant and pay with bitcoin? No worries! It is very common to find taxis or fast-food restaurants that accept bitcoin and other cryptocurrencies for payment.
London’s cryptocurrency mining industry
While Tesla is halting bitcoin transactions, citing the large-scale power consumption of bitcoin mining activities, the UK is less bothered but is instead exploring solutions to the high energy consumption of bitcoin miners. The first green bitcoin mining farm might launch in the UK soon after Agro blockchain, a London-based crypto firm recently reported that it had cracked a deal with another company to start the world’s first bitcoin mining pool which will be run on renewable energy.
Bitcoin mining only appears to be profitable in countries with relatively lower energy cost like China. Some countries have had to offer subsidies on electricity for mining firms, but that proved to be unsustainable. Norway, about four years ago, scrapped tax subsidies for crypto miners.
Crypto activities are not tax-free in the UK
Although cryptocurrencies are very decentralized, the UK is still able to tax crypto miners. Most crypto miners are subjected to income tax, which is the same as any taxes levied on an income-generating activity within the UK territory. But some crypto mining firms also pay the capital gain tax, which is the tax applied to profits made from investments.
With the highly competitive but also expensive cryptocurrency mining industry, some miners have decided to conduct the activity illegally in order to get away with the taxes. The UK police are on the move to discover such illegal mining companies.
The most recent case was the West Midlands Police discovering the illegal bitcoin mining at the Sandwell bitcoin mine initially mistaken for a cannabis farm.
Although the cryptocurrency and blockchain technology atmosphere remains conducive in the UK, the government is a hard nut to crack on matters pertaining to illegal crypto activities. The UK remains Europe’s fintech hub with many research projects going on in the field of cryptocurrencies and blockchain technology.
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