Expertise - Digital Currency
Digital currency is being used by a range of businesses and individuals to pay for goods and services. Digital currency, also known as cryptocurrency, is a low cost, easy to use legitimate source of funds which does not attract sales tax.
However, unlike just about every other area of modern life, digital currency and blockchain technology is unregulated. Bitcoin, the most popular, is not legal tender and does not fall within the definition of e-currency.
There are calls for regulation and the UK Government says it plans to introduce regulation, but unless and until that happens there are legal and compliance risks associated with your use digital currency that you should be aware of.
What are the risks?
With no regulations, Bitcoin and the like are at risk of being used for fraudulent and other criminal gain. Digital currency is largely untraceable, and can be both sent and received anonymously. This presents opportunities for criminal activities such as tax-evasion and money-laundering, and cyber crime. In fact, a 2015 report by Europol said Bitcoin was the "single, common currency for cybercriminals within the E.U.
Issues we advise on include:
Theft: cryptocurrency is covered by the Theft Act because it is treated as goods and property. This means an individual can be convicted of theft offences involving digital currency if there is sufficient evidence.
Fraud: there is an increase in the number of cases where digital currency is being manipulated for criminal gain.
Tax: HMRC treats digital currency much like a mainstream currency. Therefore, income in the form of digital currency comes under Corporation Tax, Income Tax or Capital Gains Tax. Its status in the context of VAT is unclear.
Injunctions: digital currency can be 'frozen' by order of the court. We can advise on how this works in practice.
Incorporation: we advise on how Bitcoin can be favourably used for start-ups, company incorporation.
Contractual issues: the use of Bitcoin and raise breach of contract issues including potentially complex jurisdictional matters.
Conducting business using Bitcoins, or investing in Bitcoins or other forms of digital currency, requires caution. With the lack of regulation and the inherent risks of using digital currency, we strongly recommend taking specialist legal advice if you are considering using digital currency in the course of your business.
The specialist solicitors at Selachii can give you expert advice on the appropriate policies and safeguards to implement before using digital currency. It is a fast changing industry and any forthcoming regulations could impact on your use or proposed use of cryptocurrency.
How Selachii Can Help
Selachii is a dynamic litigation law firm based in Kensington, London. Our digital currency solicitors are highly experienced in advising on the use and risks of Bitcoin and other forms of cryptocurrency. We put the best interests of our clients at the heart of everything we do. We work with both businesses and private individuals, giving them legal advice and support which is unique to them and their situation.
We don't believe in simply handing out one-size-fits-all solutions to problems. We will focus on your specific circumstances before working out the best and most cost-effective way of helping you achieve your aims.