Crypto is often compared to a rollercoaster, and wow—2024 has been no exception. From regulatory milestones to tax updates and market-moving events, this year has kept crypto investors, regulators, and the financial sector on their toes. As someone working in finance or professional services, it’s critical to understand these developments, not just for their impact on clients but also for the broader financial landscape. Let’s go!
January
HMRC tightens the tax net launching their Voluntary Disclosure Scheme for crypto
HMRC kicked off the year by issuing reminders to crypto investors about their tax obligations and launching a Voluntary Disclosure Scheme. This encourages individuals to self-report any previously undisclosed crypto gains, signalling HMRC’s commitment to cracking down on non-compliance.
Bitcoin ETF approved in the USA
After years of anticipation, the SEC approved a Bitcoin ETF, paving the way for traditional investors to gain exposure to Bitcoin without directly owning it. The milestone brings more legitimacy to crypto as an asset class, potentially increasing interest in crypto investments.
There is a caveat, however, the FCA continues to block retail access to Bitcoin Exchange Traded products, preventing UK investors from buying the ETFs in their ISAs or pension funds.
FCA Promotions Rule comes into force
The FCA implemented strict new rules to ensure marketing is ‘clear, fair and not misleading’, in an effort to provide UK consumers with protection. Risk warnings should be prominent and people should not be inappropriately incentivised to invest. Crypto exchanges are required to assess whether potential investors understand the risks before allowing them to trade. Some exchanges found the rules so challenging they stopped operating in the UK. Some have restricted certain products such as referral programs and crypto derivatives.
You may have noticed there is a lack of advertising from crypto firms as they apply and navigate new financial promotions rules. Equally, you’ll notice that exchanges have updated their terms of service and presented customers with complex surveys on crypto as an asset class.
February
Celsius asset distribution
The long-awaited asset distributions for creditors of the Celsius platform began, raising questions about tax implications for UK recipients who were dragged into a US bankruptcy.
Taxpayers are offered little tax protection from overseas bankruptcies. Individuals may find that as a result of waiting for a conclusion to the Celsius bankruptcy, they have previously unreported taxable positions, for better or worse, that will require disclosing to HMRC, depending on their individual circumstances.
For UK tax purposes, the original Celsius investment could count as a taxable disposal. This means that creditors may need to recalculate their taxes for previous years and pay tax on any gains. Many Celsius customers ended up with huge losses and the asset distribution was a small light at the end of a very long tunnel, so this will be a difficult and awkward situation to account for.
For help, take a look through our Celsius blog.
March
Sam Bankman-Fried, founder of FTX, was sentenced to 25 years in prison
FTX are thought to have sold many customer assets during the bear market. The bankruptcy and tax consequences of the FTX collapse are still playing out, with many creditors and investors unsure how to report their losses.
Unlike in the Celsius case, FTX investors retained beneficial ownership of their assets but the tax position will have its own complications. It’s important you stay updated on guidance for handling FTX-related losses to ensure you don’t fall foul of tax reporting rules.
FCA action on misleading adverts
The FCA cracked down on misleading financial promotions, warning firms and influencers about the consequences of illegal advertising. Over 10,000 ads were removed this year alone. It signals the FCA’s intent to regulate crypto more rigorously suggesting the UK government are warming to it!
The CARF consultation
What is CARF? The Crypto Asset Reporting Framework (CARF) is a global initiative developed by the Organisation for Economic Co-operation and Development (OECD) to enhance tax transparency in the crypto industry. It establishes new reporting standards for cryptoasset service providers, requiring them to share detailed transaction and ownership data with tax authorities across participating jurisdictions. The goal is to work alongside the Common Reporting Standard (CRS) to close gaps in existing tax systems that allow crypto transactions to go unreported, helping governments combat tax evasion.
Crypto is not anonymous. Increasing efforts are being made to make crypto more transparent and reduce opportunities for those who do not want to play by the rules. With at least 60 jurisdictions participating in CARF tax administrations globally, they are likely to be taking more interest in those that own cryptoassets. The world of cryptoassets is becoming ever smaller and more visible.
The government began a consultation on the CARF between 6 March 2024 and 29 May 2024, allowing cryptoasset services providers, financial institutions, their advisers, and other businesses associated with the crypto industry and financial industry to engage with HMRC on the implementation of CARF.
April
UK Crime Bill & EU Anti-Money Laundering Rules
A new UK crime bill granted law enforcement agencies the power to seize crypto without waiting for an arrest, signaling a tougher stance on crypto-related crime. The EU parliament also adopted an Anti-Money Laundering Rules Package targeting financial services and entities, including crypto, with enhanced due diligence measures and checks on customers’ identity.
Increased enforcement protects consumers, creating a more inviting environment for a mainstream audience, so it’s likely crypto adoption will rise. It’s also likely to lead to more scrutiny of crypto transactions, making it vital for records to be accurate and up to date.
US Form 1099-DA
The IRS released a draft of Form 1099-DA, which is set to become mandatory January 2025. This aims to streamline cryptocurrency transaction reporting, requiring crypto firms to disclose user activities much like traditional brokerage forms do for stocks and bonds. The initiative is part of a broader push for improved tax compliance and transparency.
The 1099-DA is a move to close gaps in US reporting obligations for crypto transactions. It’s also a shift away from aggregated portfolio-based calculations for crypto gains. While this sounds simpler, it could complicate tax calculations and make cost basis difficult for US investors using multiple accounts and wallets. You need to be prepared for these changes by the end of 2024 to avoid issues.
Rising global scrutiny for crypto tax evasion
In 2024, tax authorities worldwide have intensified efforts to combat crypto tax evasion. The Canada Revenue Agency (CRA) uncovered approximately $39.5 million in suspected unpaid taxes. Meanwhile, the Australian Tax Office (ATO) announced it is scrutinising 1.2 million crypto accounts.
There’s a growing global trend: tax authorities are leveraging enhanced tools, international agreements, and audits to address non-compliance. You must ensure you meet tax obligations across jurisdictions, particularly as governments become more adept at identifying crypto-related tax shortfalls through frameworks such as CARF.
May
Ethereum ETFs approved in the US
Ethereum ETFs joined the market, expanding investment options for clients looking beyond Bitcoin, broadening the appeal of crypto investments to a wider audience.
July
UK election – a new Labour Government
Labour’s victory in the UK election brought uncertainty about the future of the Conservative Party’s vision to make the UK a global crypto hub. While Labour remained quiet on crypto-specific policies, they had been vocal about addressing the tax gap, hinting at potential tax hikes, raising concerns about their impact on crypto investors and entrepreneurs, as well as causing harm to innovation and investment. The change in government signaled a possible shift away from a crypto-friendly approach, focusing more on tightening regulations and increasing tax revenue.
America to lead the way with Bitcoin
Trump made a speech at Bitcoin 2024 in Nashville stating that he wants America to be the nation that leads the way. Senator Lummis also proposed the BITCOIN Bill, a plan for the US government to acquire 1m Bitcoin over 5 years to create a Bitcoin Strategic reserve, interestingly funding the purchase by revaluing the US’s holding of gold certificates at the Federal Reserve and remitting the proceeds to the Treasury. Has the US started a global arms race to acquire Bitcoin?! This acceptance and positivity is a pivotal moment for Bitcoin and the crypto space. Generally where the US leads others follow so it will be interesting to see how this plays out.
September
HMRC nudge letters became more aggressive
The latest round of nudge letters from HMRC dropped with an urgent tone in comparison to more advisory nudges sent in previous years. The letters implied that HMRC has strong evidence of non-compliance, and required action within 60 days. The change in government signaled a possible shift away from a crypto-friendly approach, focusing more on tightening regulations and increasing tax revenue. Take a look at our Nudge Letter blog to find out how you should respond.
With HMRC estimating 55-90% non-compliance, crypto investors are massively exposed to increases in interest and penalties, especially those who have been unaware of their tax responsibility.
October
UK Autumn Budget tax changes
The UK’s autumn budget introduced changes to Capital Gains Tax (CGT) rates and penalties. Capital Gains Tax rates increased from 10% to 18% for basic rate tax-payers and 20% to 24% for higher rate tax-payers, effective from 30th October 2024 and higher rates of interest for unpaid tax.
It’s a big jump in CGT, especially for lower rate taxpayers and complicates filing for 2024/25 with a split tax year. It may also get you thinking about your investment strategies for crypto. In our Autumn Budget blog we look at the growing tax inequality for crypto investors.
CARF draft regulations
Following the consultation earlier in the year, HMRC shared draft regulations on CARF seeking technical feedback to ensure they operate as intended and identify areas which need clarification or further guidance. The draft outlines the reporting and due dilligence requirements for cryptoasset service providers, penalties for non-compliance and the requirement for crypto users to provide self certification.
The CARF is a positive step forward for tax compliance and transparency, but the practicalities need more thought. The handling of asset data by crypto asset service providers before transmission to tax authorities also needs to be addressed in order to protect customer privacy.
November
Digital Assets Property Bill
Members of Parliament showed support for the new digital assets property bill and urged for more crypto clarity from the new Labour government. The new bill defines the legal status of digital assets, categorising them as a new type of personal property known as “things” aiming to provide greater protection for asset owners against scams. It also helps to clarify ownership rights in legal disputes, including cases like divorces. The bill adds more clarity in terms of how crypto is treated by the legal system, helping you with it’s financial treatment, ensuring compliance and accuracy in reporting.
"The digital assets Bill is seen by this industry as an important step forward and a recognition that digital assets can be exchanged and have value. My message to the Minister is that the Treasury and the Department for Science, Innovation and Technology need to step up and at least give clarity on the Government’s thoughts about this industry, how and whether it should be regulated, and whether they want the UK to be a centre for it".
Lord Vaizey
A Bitcoin pension in the UK
The UK saw its first Bitcoin-based pension investment, marking a significant step in integrating crypto with traditional finance.
Trump elected: a crypto friendly president?
Donald Trump’s re-election raised hopes for a more relaxed regulatory approach in the US, with plans to appoint crypto-friendly officials to key financial agencies. A potential shift in US crypto policy could influence global trends, including the UK’s approach.
UK plans to finalise crypto regulatory framework
The UK is moving ahead with plans to finalise its crypto regulatory framework by early 2025. Treasury Economic Secretary, Tulip Siddiq, outlined that the framework will address key areas like stablecoins, staking, and cryptocurrencies more broadly with a unified straightforward approach. The delay follows the general election sparking anticipation over how the Labour government’s policies may differ from the previously crypto-friendly Conservative administration. Investors and businesses are watching closely for potential shifts in the regulatory landscape.
Looking ahead to 2025: what’s next for crypto?
As 2024 draws to a close, the crypto and finance industries are poised for significant changes and challenges in the year ahead. With evolving regulations, new reporting requirements, and shifting global attitudes toward digital assets, 2025 is shaping up to be another critical year for investors, accountants, and businesses.
Projected growth of digital assets
Bitcoin and Ethereum remain key players, with market analysts projecting steady growth despite the regulatory pressures of 2024. Investors will be keeping a close eye on these assets, and their performance will likely influence market sentiment heading into 2025.
Changes to UK tax reporting and CGT rates
A major update to the UK Self-Assessment tax form is imminent, with a new dedicated field for crypto capital gains, highlighting HMRC’s focus on compliance.
With higher Capital Gains Tax (CGT) rates, 2025 could also see a shift in investor behavior. Higher rates may discourage frequent trading, encouraging a more cautious approach to crypto investing.
US Form 1099-DA
The IRS’s new exchange-based Form 1099-DA, is set to take effect in 2025 and will streamline crypto tax reporting for US investors. Will the approach influence other countries to adopt similar measures, reinforcing global tax compliance efforts?
CARF implementation
Following the consultation on the Cryptoasset Reporting Framework (CARF), the UK is expected to clarify its approach. The CARF currently takes a global calendar year report approach: how will the UK align with the existing tax structure of the UK financial year running April to April?
All eyes on America
With Trump back as president, many anticipate a shift in US crypto policy. His administration has shown support for easing regulatory pressure and fostering innovation, potentially appointing crypto-friendly figures to key agencies. How this impacts global adoption and regulation remains a key question for 2025.
Crypto in the UK
The UK’s ambitions to be a global crypto hub face new challenges under Labour's government. Clarity on their vision - or lack thereof - will determine whether the UK remains a competitive market for digital assets or loses ground to other nations.
Crypto in 2025 is set to bring both challenges and opportunities. As the sector recovers from recent turbulence, Bitcoin and Ethereum continue to gain mainstream traction. With new regulations and frameworks on the horizon, the next year promises to redefine the landscape for investors, businesses, and the global economy.
