UK Releases Guidance for Charities Receiving Crypto Donations
- The Commission warned charities about the risks associated with dealing in cryptocurrencies.
- Crypto-receiving charities must comply with existing UK financial regulations.
UK-based charity organizations accepting cryptocurrencies are mandated to keep accurate records of incomes and comply with tax and money laundering regulations. The UK Charity Commission stated the policy in a guidance published on Wednesday, April 26, 2023.
The Commission warned charities about the risks associated with dealing in cryptocurrencies. According to the regulator, crypto assets like Bitcoin (BTC) and Non-fungible tokens (NFT) can be volatile. It noted that they are prone to hacks and can be hard to trace. Hence, they will need to make proper considerations before accepting such assets as payments or donations.
Helen Stephenson, the Commission’s CEO, said:
Our guidance stresses the risks involved in the use of cryptocurrency and advises trustees to exercise caution.
Several months ago, the Commission’s Assistant Director of Policy, Sam Jackson reportedly identified crypto as a potential “mainstream route to investing, trading, and moving assets.” Jackson cited the successful use of crypto to raise funds in Ukraine and the UK’s target to become a crypto hub.
Before this time, the UK Charity Commission announced it had initiated investigations into the activities of Effective Ventures Foundation, reported to have received support from the embattled former CEO of FTX, Sam Bankman-Fried (SBF), and his exchange.
In a January 2023 announcement, the Commission said it would investigate the extent of the Foundation’s risk exposure due to its association with SBF. The regulator said it would assess the risk to the charity’s assets and whether the trustees comply with their duties to protect the assets.
According to the Commission, charities choosing to continue accepting crypto assets or NFTs must adopt a policy on accepting, refusing, and using such crypto assets, including how to make decisions about converting them to traditional currency. They must also ensure that platforms receiving such funds comply with UK regulations and are registered with the FCA for anti-money laundering and counterterrorism as required.