CRYPTOCURRENCY
“ IN TIME , WE MAY SEE MINING OPERATIONS CARRIED OUT BY LARGE CORPORATE ENTITIES AND THOSE WITH THE ' DEEPEST POCKETS '”
DANIEL SEELY FINANCIAL REGULATORY LAWYER , FREETHS
What is the future of crypto mining ? Events of the last 12 months , including the headline-grabbing collapse of crypto exchange FTX and subsequent police investigations , will have done nothing to sanitise crypto ' s image or prevent regulators from circling . Increased scrutiny , including tighter regulation , should now be considered near-inevitable to crypto operators planning for the future .
As the crypto industry matures , what were once considered ' cottage industries ' will rapidly become industrial-scale operations and crypto mining businesses will have to adapt to the changing landscape . This could mean changing the way they ' re structured .
As Freeths ' Daniel Seely explains , crypto businesses will need to consider the tax implications of their operation . For example , a ' payment ' in cryptocurrency as a reward for mining “ could give rise to tax liabilities , since cryptocurrencies are increasingly seen as acceptable and taxable assets ”. In addition , if an individual wants to sell that cryptocurrency at a later date , other taxes such as capital gains tax might become applicable .
“ Whilst many crypto businesses may want to expand , this may mean that they wish to register as limited companies so as to provide the directors with legal protection by being able to avoid personal liability , as well as potentially making their businesses more attractive to investors .
“ Firms will , however , need to consider the various legal requirements which will arise from this – if a business grows , will it look to take on employees ? If so , it will need to consider the implications and expenses that will follow , such as the costs of preparing employment contracts , obtaining employers ’ liability insurance , as well as pension contributions and tax liabilities .”
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