What are Cryptoassets?
HMRC defines cryptoassets as โ€œcryptographically secured digital representations of value or contractual rightsโ€ that have the potential to be transferred, stored and traded electronically.
HMRC do not consider cryptoassets such as Bitcoin and Ethereum to be currency or money. The governmentโ€™s Cryptoasset Taskforce (CATF) identifies three types of cryptoassets: exchange tokens, utility tokens and security tokens.
  • Exchange tokens โ€“ these are intended to be used as a method of payment and include cryptocurrencies like Bitcoin and Litecoin. They do not provide any rights or access to goods or services.
  • Utility tokens - these provide the holder with access to particular goods or services on a platform usually using Distributed Ledger Technology (DLT).
  • Security tokens - these may provide the holder with particular interests in a business, including debt due by the business or a share of profits in the business.
We will not go into more detail about the different types of cryptoassets, as their treatment for taxation purposes is based on the โ€œnature and use of the token and not the definition of the tokenโ€.
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