Response to FCA Consultation Paper - Regulating Cryptoasset Activities

Response to HM Revenue and Customs Call for Evidence: Taxation of Stablecoins

In this episode we present an audio version of Bitcoin Policy UK’s response to HMRC’s Call for Evidence on the taxation of stablecoins, originally published on 6 May 2026.  The paper argues that if HMRC recognises stablecoins as payment instruments deserving lighter tax treatment, then the same logic should also apply to Bitcoin when it is used for everyday payments. 🔍 The Core Problem: Bitcoin Payments Trigger Capital Gains Tax Under current UK rules, every time someone spends Bitcoin, even buying a coffee, it can create a capital gains tax (CGT) event. That means users may need to: *  Calculate sterling-equivalent acquisition and disposal values  *  Track transaction histories  *  Maintain detailed records  *  Potentially report activity to HMRC  Bitcoin Policy UK argues that this creates: *  Significant administrative friction  *  Deterrence to real-world payment usage  *  Very little meaningful tax revenue  ⚖️ The Central Argument: Treat Payment Activity Like Payment Activity The submission argues that Bitcoin should not automatically be treated as a speculative investment when it is functioning as a medium of exchange. BPUK proposes a usage-based framework: *  Retail payments → treated similarly to money/foreign currency  *  Speculative trading → taxed normally  *  Long-term investment → standard CGT rules apply  The key point is that function should matter more than asset category. 💡 Why Bitcoin Qualifies The paper argues that Bitcoin already operates as a meaningful payment network in the UK: *  Bitcoin accounts for a significant share of UK crypto payments activity  *  Lightning Network infrastructure enables instant, low-cost settlement  *  UK businesses already use Bitcoin payment processors and merchant networks  The consultation’s rationale for stablecoin payment relief therefore applies equally to Bitcoin. 📉 “Regulatory Theatre” and the Bed-and-Breakfasting Problem One of the paper’s strongest claims is that the current regime creates complexity without generating meaningful revenue. Many users already lawfully: *  Spend Bitcoin  *  Immediately repurchase the same amount  *  Reset their cost basis (“bed-and-breakfasting”)  As a result: *  HMRC collects very little CGT from genuine payment activity  *  Users still face substantial compliance burdens  BPUK argues this is effectively “regulatory theatre”. 🌍 International Competition The paper also highlights how other jurisdictions are moving more aggressively: *  The Czech Republic eliminated CGT on long-held Bitcoin  *  Germany exempts crypto gains after certain holding periods  *  Several US states have passed Bitcoin rights legislation  The warning is clear - without reform, the UK risks losing: *  Talent  *  Capital  *  Innovation  *  Payment infrastructure leadership  📈 The “Velocity Multiplier” A major economic argument in the submission is the idea of a velocity multiplier. BPUK argues that removing CGT friction would: *  Increase transaction frequency  *  Encourage merchant adoption  *  Expand economic activity  *  Ultimately increase VAT receipts  The paper suggests this could more than offset any minimal reduction in CGT collection. 🏛️ Policy Recommendation Bitcoin Policy UK strongly supports: *  A full CGT exemption for cryptoasset payments used for goods and services  *  A framework based on economic function, not issuer or denomination  *  Inclusion of Bitcoin alongside stablecoins where genuine payment utility exists  The submission warns that limiting relief only to sterling stablecoins would create artificial market distortions and ignore existing Bitcoin payment ecosystems. 🧠 The Bottom Line This paper frames the issue as bigger than tax simplification. According to BPUK, the UK now faces a strategic choice: *  Preserve outdated treatment built around speculative assumptions, or  *  Recognise the emergence of digital payment infrastructure and position Britain as a global leader in crypto payments policy  The future of payments may be digital. The question is whether the UK intends to lead or follow. 📄 Read the full written paper here: 👉  Response to HMRC Call for Evidence: Taxation of Stablecoins [https://img1.wsimg.com/blobby/go/aea8e937-fd18-400f-afd9-c3513112c757/downloads/f4c36194-5cb8-4116-b3d5-6457dd10eaf6/Consultation%20Response%20HMRC%20Stablecoins%20Tax.pdf] To find out more about Bitcoin Policy UK's work and how you can get involved, visit: https://bitcoinpolicy.uk/ [https://bitcoinpolicy.uk/]

Response to FCA Consultation Paper - Regulating Cryptoasset Activities

In this episode, we present an audio version of Bitcoin Policy UK’s response to FCA Consultation Paper CP25/40 on the regulation of cryptoasset activities, originally published on 29 January 2026. This submission sets out BPUK’s position on how the UK should regulate cryptoassets and, crucially, how it should avoid category errors that treat Bitcoin as interchangeable with issuer-driven tokens. 🔍 Core Argument: Avoid the Category Error A central theme of the submission is that Bitcoin is not interchangeable with the wider “cryptoasset” sector. Bitcoin: * Has no issuer, foundation or controlling entity * Cannot alter its monetary policy by committee * Enables peer-to-peer settlement without intermediaries * Functions as a form of digital commodity money Many other cryptoassets, by contrast, are issuer-driven products with insider allocation, governance discretion and venture-style backing. Regulatory design must reflect this distinction. 🧭 The Perimeter Boundary That Matters BPUK urges the FCA to draw a hard line between: * Custodial/intermediary activity (where regulation is effective and appropriate), and * Non-custodial infrastructure such as wallet software, node operators, miners and open-source developers (where firm-style obligations are infeasible or nonsensical). The framework will succeed or fail based on whether it respects this boundary. 🏛️ Key Policy Themes The response covers a targeted set of consultation questions, focusing on areas where regulatory design has the greatest impact: 1️⃣ Retail Protection BPUK supports strong retail protections where harm concentrates: * Custody failures * Leverage and lending risks * Conflicts of interest * Issuer-driven token promotion cycles However, it cautions against treating Bitcoin as equivalent to centrally issued tokens when applying restrictions. 2️⃣ Best Execution & Price Source Rules The paper warns against overly rigid UK-only pricing or execution requirements that could: * Reduce access to global liquidity * Worsen spreads for UK consumers * Fragment markets Principles-based standards focused on outcomes are preferred. 3️⃣ Conflicts of Interest & PFOF BPUK strongly supports tighter controls on: * Internalised trading * Token listing conflicts * Payment for order flow (PFOF) Retail users must not become monetised inventory. 4️⃣ Staking & DeFi Where a clear controlling person exists, regulation is appropriate. But “protocol regulation” by default risks: * Capturing open-source infrastructure * Imposing unenforceable obligations * Chilling domestic innovation Definitions of “control” must focus on custody, discretion, and unilateral power, not vague influence. 5️⃣ Tax & Lending Neutrality The response also references ongoing tax issues around DeFi lending and staking, arguing that: * Current tax treatment does not reflect economic substance * Cryptoasset lending is treated less favourably than traditional securities * The UK risks falling behind without reform 📄 Read the full written paper here: 👉  Response to FCA Consultation Paper CP25/40 [https://img1.wsimg.com/blobby/go/aea8e937-fd18-400f-afd9-c3513112c757/downloads/9581b5a6-181b-4bf5-a563-99fb79439ebb/FCA%20CP25_40%20(Regulating%20Cryptoasset%20Activities.pdf?ver=1770470220895] To find out more about Bitcoin Policy UK's work and how you can get involved, visit: https://bitcoinpolicy.uk/ [https://bitcoinpolicy.uk/]

Response to HM Treasury on Cryptoassets Regulation Part 2

In this episode, we present an audio version of Part 2 of Bitcoin Policy UK’s response to HM Treasury on Cryptoassets Regulation, originally published on 26 April 2023. The paper responds to a number of questions raised by HM Treasury relating to cryptoasset regulation, environmental impact, and the role of Bitcoin mining within the UK economy and energy system. What this episode covers In this episode, Bitcoin Policy UK sets out: * What Bitcoin is, and why its permissionless, energy-secured design distinguishes it from other digital assets * Why Proof of Work is fundamental to Bitcoin’s monetary policy, security, and censorship resistance * How common claims about Bitcoin’s environmental impact are often misunderstood or incorrectly framed * Why metrics such as “energy per transaction” are misleading when applied to Bitcoin Bitcoin mining and energy use The paper explains: * How Bitcoin’s energy use adjusts dynamically based on network conditions * Why the Cambridge Bitcoin Electricity Consumption Index is the most reliable source for estimating Bitcoin’s energy usage * How Bitcoin mining compares to other industries in terms of total global energy consumption It also highlights that Bitcoin mining currently uses a high and increasing proportion of sustainable energy, with estimates approaching 60% at the time of publication. Environmental mitigation and net-zero opportunities The submission explores two areas where Bitcoin mining could support UK climate and energy objectives: 1. Methane mitigation * Using Bitcoin mining to capture and monetise methane from landfills and flaring * Reducing emissions from one of the most potent greenhouse gases * Making mitigation infrastructure economically viable for landfill operators and local authorities 2. Renewable grid stabilisation * Bitcoin miners as highly flexible electricity consumers * Acting as buyers of first and last resort for renewable generation * Supporting the economic viability of wind, solar, and other renewable projects Policy implications The paper argues that: * Bitcoin mining should be assessed on evidence, not assumptions * Regulation should recognise Bitcoin’s unique characteristics rather than treating it as a generic cryptoasset * The UK has an opportunity to support innovation by aligning Bitcoin mining with renewable energy and methane reduction strategies The submission concludes by encouraging HM Treasury to explore targeted incentives and further research into Bitcoin mining’s potential role in achieving the UK’s net-zero objectives. 📄 Read the full written paper here: 👉  Response to HM Treasury on Cryptoassets Regulation Part 2 [https://img1.wsimg.com/blobby/go/aea8e937-fd18-400f-afd9-c3513112c757/downloads/56e7c423-5e31-4819-9e34-5fb966a4ef80/Consultation%20Response%20to%20HM%20Treasury%20Part%202%20re.pdf] To find out more about Bitcoin Policy UK's work and how you can get involved, visit: https://bitcoinpolicy.uk/ [https://bitcoinpolicy.uk/]

Response to HM Treasury on Cryptoassets Regulation Part 1

In this episode, we present an audio version of Part 1 of Bitcoin Policy UK’s response to HM Treasury on Cryptoassets Regulation, originally published on 26 April 2023. This submission sets out a clear and principled framework for how cryptoassets should be regulated in the UK, starting with a crucial distinction that policymakers too often ignore: Bitcoin is fundamentally different from all other cryptoassets. The paper argues that regulation should focus on activities and intermediaries, not the Bitcoin protocol itself, and warns that poorly targeted rules risk being both unenforceable and economically damaging. 🔑 Key themes covered in this episode * Why Bitcoin must be treated separately from “crypto” Bitcoin has no issuer, no controlling mind, and no governance mechanism that regulators can influence, unlike almost every other token. * Decentralisation and enforceability Why attempting to regulate Bitcoin nodes or miners is both disproportionate and practically impossible. * Preventing customer harm where it actually occurs The case for prioritising regulation of exchanges, custodians, and token listings, not peer-to-peer infrastructure. * Mining, nodes, and regulation overreach Why running Bitcoin software is not a financial activity and should not fall within the regulatory perimeter. * Territorial scope and reality checks How Tor, VPNs, and global node distribution undermine attempts at jurisdiction-based enforcement. * Stablecoins, lending platforms, and real risks Lessons from Celsius and other failures, and why transparency, reserves and disclosure matter. * Financial promotions and ‘positive frictions’ Why the UK risks driving compliant firms offshore while disadvantaging domestic businesses. * Bitcoin as commodity money, not a financial liability How Bitcoin differs from bank money, central bank money, and most digital assets. 📄 Read the full written paper here: 👉  Response to HM Treasury on Cryptoassets Regulation Part 1 [https://img1.wsimg.com/blobby/go/aea8e937-fd18-400f-afd9-c3513112c757/downloads/4eb38826-0a03-4d45-8707-757d4a46f21f/Consultation%20Response%20to%20HM%20Treasury%20Part%201%20re.pdf] To find out more about Bitcoin Policy UK's work and how you can get involved, visit: https://bitcoinpolicy.uk/ [https://bitcoinpolicy.uk/]

Response to the Bank of England and HM Treasury on the Digital Pound

In this episode, we present an audio version of Bitcoin Policy UK’s response to the Bank of England and HM Treasury on the Digital Pound, originally published on 31 May 2023. This paper sets out why a retail CBDC represents a fundamental shift in the relationship between citizens and the state, raising serious concerns around privacy, financial surveillance, programmability, and democratic oversight. Rather than modernising money, the digital pound risks embedding new forms of control into the financial system while failing to solve the problems it claims to address. 🔍 What This Episode Covers * What the digital pound actually is, and how it differs from cash and commercial bank money * Why privacy safeguards are insufficient, even when framed as “proportionate” or “trusted” * The risks of programmability, including restrictions on spending and behavioural nudging * Why intermediated models don’t remove state power, they merely obscure it * The danger of normalising financial surveillance through everyday payments * How a CBDC could crowd out private innovation rather than support it * Why existing payment systems already meet most stated policy goals * The importance of preserving cash, choice, and exit options ⚠️ Key Arguments from Bitcoin Policy UK * A retail CBDC is not a neutral technical upgrade, it is a political and constitutional change * Promises of privacy are policy choices, not technical guarantees * Once built, CBDC infrastructure is easy to repurpose and hard to roll back * Financial freedom depends on the ability to transact without constant monitoring * The UK should focus on competition, open standards, and cash resilience, not centralised digital money 🧠 Why This Matters As governments explore CBDCs globally, decisions made now will shape the future of money for decades. This submission argues that the digital pound risks undermining trust, freedom, and resilience, precisely at a time when those qualities matter most. Bitcoin Policy UK urges policymakers to think carefully about second-order effects, long-term incentives, and the preservation of individual autonomy in the financial system. 📄 Read the full written paper here: 👉  Response to the Bank of England and HM Treasury on the Digital Pound [https://img1.wsimg.com/blobby/go/aea8e937-fd18-400f-afd9-c3513112c757/downloads/372bd585-99f3-484a-858e-3b7936682aa0/Digital%20Pound%20%28CBDC%29%20a%20new%20form%20of%20money%20Bank%20.pdf] To find out more about Bitcoin Policy UK's work and how you can get involved, visit: https://bitcoinpolicy.uk/ [https://bitcoinpolicy.uk/]