The FCA on Regulating Cryptocurrencies
The Financial Conduct Authority (FCA) has recently confirmed that firms that deal in cryptocurrency derivatives need to be duly authorised and regulated. This statement precedes a review of the cryptocurrency market due later this year, which was announced in the FCA’s Business Plan for 2018/2019. The review is a joint effort between the FCA, the Bank of England and the Treasury.
A cryptocurrency is defined as ‘a digital currency produced by a public network, rather than any government, that uses cryptography [codes which keep information safe in computer networks] to make sure payments are sent and received safely’. The first cryptocurrency was Bitcoin, and it is still the biggest, though other, ever more obscure-sounding ones have sprung up – such as Litecoin and Dogecoin.
Cryptocurrencies have grown in importance for both markets and regulators in recent years. The anxiety is justified, as the trading of cryptocurrencies constitutes a new and relatively unregulated market. The (now former) New York Attorney General, Eric Schneiderman, announced that his office has launched the Virtual Markets Integrity Initiative, a fact-finding inquiry into the policies and practices of platforms used by consumers to trade cryptocurrencies. The inquiry springs from concerns about the transparency and accountability of such trading – these are serious issues, given that the Bitcoin market reached $118bn at the start of April.
In the UK, neither the Bank of England nor the FCA regulates the trade in cryptocurrencies as such. However, in 2017 the FCA issued consumer warnings on cryptocurrency Contracts for Difference (CFDs) and the risks of Initial Coin Offerings(ICOs), where the issuer accepts a cryptocurrency in exchange for a proprietary ‘coin’ or ‘token’ related to a specific firm or project. The FCA warned that the value of cryptocurrency CFDs is extremely volatile and suffers from a lack of transparency, while ICOs are not FCA regulated and provide no investor protection in the UK. Moreover, the FCA held that trading in financial instruments with cryptocurrencies as the underlying assets – for example cryptocurrency futures, CFDs and options – is likely to require regulatory authorisation.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.
Raising the bar: UK Supreme Court clarifies the requirements for HMRC to issue Follower Notices
On 2 July 2021, the Supreme Court delivered its judgment in R (on the application of Haworth) v HMRC  UKSC 25, finding unanimously in favour of the taxpayer and upholding the Court of Appeal’s decision to quash the follower notice issued to him.
The Danish Supreme Court decides the Fidelity case
The Fidelity case concerned claims brough by three undertakings for collective investment in transferable securities (UCITS) for the repayment of Danish withholding tax on dividends received from companies resident in Denmark between 2000 and 2009. The Supreme Court rejected the claims on the grounds that the Fidelity UCITS did not fulfil the conditions for the exemption provided by Danish law.
A yellow card for footballers and their agents……let’s bring in another match official
There has been long running tension between HMRC and the way that footballers and their agents are remunerated. As the Professional Footballers’ Association wade into the debate, Helen McGhee discusses the problems arising from agents’ fees and image rights.