We are going to look at these currencies and what they mean for people who use them. The chances of committing what the law would deem as fraud when dealing in these currencies is very high hence why legal representation and advice is recommended.
How Do Crypto Currencies Work?
Many people thought digital currencies were simply a flash in the pan however with the rapid growth of the market they look as though they are here to stay. However, how do they actually work and why are there legal implications associated with using them?
Essentially these currencies cut out the banks. It works by sending virtual coins through peer-to-peer networks and these can be used to buy goods and services online or even to withdraw the value of the coin to your bank account. In fact, the value of a Bitcoin has varied greatly over the years from a low of around 65p in early 2011 to over £300 now.
Why Are They Controversial?
Essentially they can be seen as a way of eliminating banks from many transactions. Many people also try mining which consists of creating their own Bitcoins.
Due to the fact that they are not actually deemed as ‘legal currency’ many people wrongly believe that they are not protected under the law. However technically as they are considered goods and property – even though they are digital goods – then they fall under several pieces of legislation. The Theft Act of 1968 for instance would cover Bitcoin theft – a prevalent problem and over £600,000 worth of Bitcoins were stolen from an Australian man last year – and in terms of income they would fall under Corporation Tax, Income Tax or Capital Gains Tax depending on how they have been used.
The Financial Conduct Authority (FCA) does not deem it is actual currency however this does not mean that businesses cannot be protected in some way when dealing in these crypto currencies.
Seeking Legal Advice
If you are thinking of investment in regards to Bitcoins or even allowing your business to deal in them then you need to put safeguards in place to protect yourself and your company.
We recommend that you seek legal representation and advice when it comes to these currencies that are used anonymously online due to the risk involved in regards to fraud in addition to how they are treated by HMRC for instance. While the world of business is starting to look into the idea of using these crypto currencies as alternative payment options the unregulated nature of the funds increases the risk and to protect yourself you should look for a legal professional who can give sound advice.
To speak with a bitcoin lawyer call +44(0) 20 7792 5649 or email This email address is being protected from spambots. You need JavaScript enabled to view it.
