The Bullet No.57 The United Kingdom Issue
TL;DR Sadly, the UK has not become a global crypto hub, yet
“The U.K., and London in particular, has become the global crypto hub” said UK Chancellor Jeremy Hunt just 2 months ago in UK Parliament. Let me share a few bullets from my perspective that sadly suggest that isn’t the case yet:
Taxes
Since my last letter, the deadline to pay your tax bill for the 2022/23 tax year passed. A date I’ve dreaded, because I chose to sell any Bitcoin I had during that tax year to pay for a house extension. No regrets on selling it, Bitcoin did its job and allowed me to save over the prior years without losing purchasing power and now we have a nicer place to live #winallround. Except for the fact that any gain in the £ value of Bitcoin I had was subject to capital gains tax under current UK legislation. Luckily my bill was relatively minor but more forward-thinking countries are recognising Bitcoin as currency rather than an asset, or at least not applying tax to it. Among them are Germany, El Salvador, Portugal, Singapore and Switzerland to name a few. Countries with large populations and responsible for significant portions of global GDP. If you’re an entrepreneur in this space, selecting a favourable tax jurisdiction is a major consideration and currently the UK isn’t able to compete with some of its European neighbours.
Regulation
Back in December 23, Mr Hunt also had this to say; “but to make sure that the market really can take off in the way that was intended — in a responsible way — we need to regulate it, which is why we’ve introduced regulations for stablecoins, for promotion of crypto services.”
One impact of these regulations is that anyone looking to acquire Bitcoin or other crypto via an exchange in the UK now has to complete a questionnaire assessing their suitability before being allowed to do so. While I agree that people should know what their getting into, do their own research, and take their own risk, I believe that should be the choice of the individual, not whether you can pass an arbitrary test. Yes people need to be protected from scams and fraud, and there is existing legislation for that which should be applied, but there is no need to introduce regulation that limits access. Earning upwards of £100k a year is one of the criteria that they ask about, which is elitist and maintains access for only the wealthy, hardly the behaviour of a global hub. Besides, this specific type of regulation is useless because the answers to the questions are readily available on the internet. All it does it create needless barriers.
ETF
Approval of Bitcoin ETFs in the US happened quicker in the year than I expected, getting the go ahead in early Jan. ETF stands for Exchange Traded Fund and is a financial product that tracks the price of an underlying asset and holds those assets securely on your behalf, in this case Bitcoin. It’s good to question why they’re needed considering you can hold Bitcoin yourself with your own keys, but many people prefer the convenience of an institution doing that work for them and they see it as a safer and better option, which is why there is a market for ETFs in the first place. You’re also able to hold ETFs within your retirement account and other funds, opening up the door for institutional investment into Bitcoin. The Bitcoin ETFs have been the most successful ETF launches in US history, with the volume of US Dollars piled into them at record levels and daily volume of buying outstripping the daily supply. But, you’ve guessed it, Bitcoin ETFs don’t exist in the UK and you can’t access the US ones over here either, hardly the behaviour of a global hub. Some argue ETFs are anti to what Bitcoin was invented for in the first place, but that’s not why the UK won’t let you access them, it’s simply that we’re not even trying to innovate like our American cousins.
Satoshi
Let’s end on a positive note for the UK, where for the last 2 weeks London has definitively been the global centre of one of the biggest questions in Bitcoin, who is Satoshi Nakamoto (the pseudonymous inventor of Bitcoin)?
An Australian by the name of Craig Wright has long claimed he is Satoshi, even going as far as suing many people over the last few years who have dared say that he’s not. Now a consortium of Bitcoin interests including Coinbase and Jack Dorsey have come together under COPA (Crypto Open Patents Alliance) to determine the facts and make Wright prove that he is. There are so many stories in Bitcoin that will make great films, and this has the potential to be another, with claims of forged documents, broken or lost hard drives worth millions, and Craig’s legal costs being funded by an offshore billionaire. Everything in the court room is being reported through social media and some of the cross examination of Wright has been hilarious to follow. In one instance, after COPA presented evidence of one such forged document submitted by Wright’s team, Wright claimed he wasn’t the one that forged it because “if I forged that document, it would be perfect”. We should have a verdict sometime next month.
And the verdict on Jeremy Hunt? I wouldn’t go as far to say his claim about the UK being “the global crypto hub” is forged but it’s certainly not well founded and there is much work to do. I hope the UK can catch up soon and realise that vision, not least because having invested time and resources into my home, I’d like to stay living in it.
Peace, love and Bitcoin,
Rob
Disclaimer: Whatever I present here are my own thoughts and opinions and not necessarily that of Visa.