In line with policy on trading and investing more generally, the Government has no plans at this time to put an age limit on trading or investing in digital currencies, says Lord Bates.
As the pile of warnings regarding cryptocurrencies continues to rise, so does the number of questions that regulators face with respect to this market segment. The UK Government had to answer a question about age limits for trading cryptocurrencies.
On Monday, February 12, 2018, Lord Bates, answered that:
“In line with policy on trading and investing more generally, the Government has no plans at this time to put an age limit on trading or investing in digital currencies.”
He added that the Government recognises the significant benefits that digital currencies and the related technology could bring, as well as potential challenges. The Government is monitoring the situation, and believes any regulation should be proportionate and risk-based, he said.
In November last year, HM Revenue and Customs said it had no plans to permit to UK taxpayers to pay their taxes in digital currencies. Lord Bates has also provided some information regarding taxation for the digital currency sector and any potential reforms in this aspect. He explained that “gains made on digital currency are currently chargeable at the normal Capital Gains Tax rates, depending on the facts of the case”.
The information was provided shortly after Lord Bates clarified the stance of the UK Government on the possible regulation of digital currency businesses. On November 21, 2017, he said that the Government was negotiating amendments to the 4th Anti-Money Laundering Directive set to bring virtual currency exchange platforms and custodian wallet providers into the scope of Anti-Money Laundering and Counter-Terrorist Financing regulation. This will require such firms to conduct due diligence upon their customers, with their activities being overseen by national competent authorities for these areas, he added. The UK Government supports the intention behind these amendments.
Lord Bates noted that the stance of individual firms towards providers of digital currencies is a commercial decision for those firms, and it would not be appropriate for the UK Government to intervene.
In the meantime, warnings about the risks associated with cryptocurrencies have been on the rise. In September last year, the Financial Conduct Authority issued a consumer warning about the risks of Initial Coin Offerings (ICOs). And in November, the regulator issued a special warning about the risks stemming from cryptocurrency CFDs.
The European Securities and Markets Authority (ESMA) has opened a consultation on proposed new rules for CFD and binary options offering, with the rules to cover CFDs on cryptocurrencies too.
ESMA is considering how CFDs on cryptocurrencies fit within the MiFID regulatory framework as financial instruments. The regulator is currently discussing whether CFDs on cryptocurrencies, whose underlying assets have displayed very high price variation, should be addressed in the measures and whether a 5:1 initial leverage would provide investors with sufficient protection. Alternatively, a lower leverage limit (2:1 or 1:1) or stricter measures (such as a prohibition on the marketing, distribution or sale of CFDs in cryptocurrencies to retail clients) could be considered.