El Salvador’s move to make bitcoin a legal tender could end up causing problems at tax time elsewhere in the world, a report from The Telegraph says.
A report says that the U.K.’s HMRC could face a legal challenge from investors who want to cut down on tax bills through a loophole for foreign currency. The money made from moves in foreign currencies held in bank accounts is exempt from capital gains tax – though crypto is not.
That said, the report notes that the use of bitcoin as a normal currency in El Salvador means it might be able to get better tax treatment – unless HMRC makes a move to change that.
If bitcoin were considered a currency by HMRC, things might change for many investors. The report says if more countries take up bitcoin as legal tender, it might be hard to argue for its exclusion from the exemptions.
The report notes that bitcoin prices have almost doubled this year despite volatility, but Nayib Bukele, El Salvador’s president, has bet on digital assets as a way to make the country a big destination for crypto.
Meanwhile, a U.K. man, Hisham Chaudhary, has been found guilty of funneling money to the Islamic State using bitcoin, The Telegraph reports.
In 2019 he is reported to have said that they’d “been doing this for years but no one has been caught by virtue of Allah.”
The ruling, per the report, is the first time a U.K. court has convicted someone of using cryptocurrencies to finance terrorist activities.
The Telegraph writes that Chaudhary had allegedly sent £5,000 to finance the jailbreak of a wife of a Danish jihadist from a detention camp.
However, with digital currencies growing in ubiquity, regulators think they’ll have to step up their ways of dealing with such crimes. In one attempt, the City regulator plans to call in crypto experts to help with training on how to stop money launderers and other such criminals who make use of digital assets.
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