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November 2019

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Historically, U.S. tax law has allowed a taxpayer to exchange one investment property for another and defer the income tax consequences of that exchange so long as both the relinquished property and the acquired property are sufficiently similar—along with several other requirements.  This type of tax-deferred exchange is referred to as a Like-Kind or Section 1031 Exchange.  Without this Like-Kind Exchange treatment, a taxpayer would owe income tax on the increase in value of the…

A UK Government-backed, industry-led initiative has published an expert legal statement recognising cryptoassets as property and smart contracts as enforceable agreements under English law. The statement is published by the UK Jurisdiction Taskforce (UKJT), a taskforce of the UK’s Lawtech Delivery Panel. The report concludes that: Cryptoassets are, in principle, to be treated as property under English law. They are not disqualified from being property by their distinctive features (intangibility, cryptographic authentication, use of a…

The Securities and Futures Commission (“SFC”) has taken another major step towards establishing a regulatory framework for virtual asset trading platforms, and is now inviting licensing applications from platform operators who are willing and able to comply with new licensing criteria and continuing compliance requirements outlined in the SFC’s recently published Position Paper – Regulation of virtual asset trading platforms (“Position Paper”). Licensing applications are open from 6 November 2019. Background In November 2018, the…

On November 6, 2019, U.S. prosecutors in the Southern District of New York announced charges against Asa Saint Clair for his participation in an investment scheme tied to a purported digital coin offering called IGOBIT.  Saint Clair allegedly participated in a scheme to defraud victims into providing loans tied to the launch of IGOBIT by World Sports Alliance, a purported intergovernmental organization focused on promoting international development through sports, and falsely promised investors guaranteed returns…

Implementation of the EU’s Fifth Money Laundering Directive on 10 January 2020 is now fast approaching. To the Financial Conduct Authority’s long list of responsibilities has been added the role of anti-money laundering (AML) supervisor of UK crypto-asset businesses. With this in mind, the FCA has published a new webpage setting out key information for businesses. This includes the crypto-asset activities likely to fall within scope although these will not be definitely known until HM Treasury publishes…

The UK tax authority, HM Revenue & Customs (“HMRC”), published, on November 1, 2019 guidance for companies and businesses on how tax transactions involving cryptoasset exchange tokens (such as Bitcoin) will be taxed. This covers liability to corporation tax, capital gains tax, employment taxes, VAT and stamp duties. Much will depend on whether or not the activity involving exchange tokens amounts to trading or not. Following are the key points for businesses. Cryptoassets are not…