UK Budget and Regulatory Changes in Cryptocurrency
The recent UK budget and regulatory changes signal a definitive move towards enhanced scrutiny of the cryptocurrency industry, according to Azariah Nukajam, who leads compliance at the crypto exchange Gemini. She highlighted several recent initiatives, including the Draft Statutory Instrument (SI), the planned Cryptoassets Order set to be rolled out in May 2025, and the upcoming tax transparency framework known as CARF. These developments suggest that the UK is adopting a regulatory approach akin to that of traditional financial markets for digital assets.
Tax Rates and Compliance Measures
One particularly encouraging aspect of the budget for cryptocurrency advocates is the announcement that there will be no increase in tax rates on crypto transactions. Nukajam praised this decision, asserting that treating cryptocurrencies equivalently to other asset classes bolsters their potential for sustainable investment. Currently, capital gains tax on crypto in the UK varies from 18% to 24%, reflecting an individual’s income level. According to Nukajam, this rate is more favorable compared to some European counterparts; for instance, Spain’s rates can escalate to 28%, and France has recently approved a rule that categorizes crypto assets exceeding €1.3 million as “unproductive wealth,” irrespective of whether they have generated profits.
Despite the remaining tax rates, compliance measures are tightening, as noted by Nukajam. The UK’s HM Revenue and Customs (HMRC) has escalated its enforcement actions, increasing the number of warning letters issued to those suspected of underreporting their crypto taxes. Meanwhile, the forthcoming CARF initiative, anticipated to launch in 2026, aims to significantly enhance governmental oversight of cryptocurrency transactions, with a clear intent to eliminate tax evasion loopholes and bolster reporting accuracy.
Future of Cryptocurrency in the UK
Nukajam emphasized that these regulatory enhancements could ultimately support platforms like Gemini, allowing them to become more integrated within the traditional UK financial landscape and foster trust among both retail and institutional clients. She believes this evolving environment could position regulated entities like Gemini as key players in the mainstream financial system. Furthermore, she argued that as long as UK authorities continue to offer attractive tax conditions and synchronize their regulations with those in other jurisdictions, the country has the potential to establish itself as a prominent hub for digital currencies. She also suggested considering innovative policies, such as Germany’s tax exemption for crypto held longer than one year, as a strategy to promote long-term investments in the UK crypto market.
