UK Charity Commission Issues New Crypto Guidance

New Guidance for Charities

The UK Charity Commission has released updated guidance for charities dealing with cryptocurrencies, highlighting essential compliance with existing UK financial regulations. The guidance emphasizes that charities must maintain accurate financial records and adhere to tax and anti-money laundering laws.

Risks of Cryptocurrency

Charities accepting cryptocurrencies such as Bitcoin and NFTs must consider the associated risks. These digital assets are known for their volatility, susceptibility to hacking, and difficulty in tracking. This highlights the need for careful evaluation before accepting them as donations or payments.

Regulatory Compliance

Charities are advised to adopt clear policies on accepting and managing cryptocurrencies. This includes deciding when to convert crypto assets into traditional currency. Furthermore, charities must ensure that any platforms handling these funds comply with UK regulations and are registered with the Financial Conduct Authority (FCA) for anti-money laundering and counterterrorism.

Recent Investigations

The Commission has been active in investigating potential risks related to crypto assets within the charity sector. Notably, it examined the Effective Ventures Foundation due to its ties with Sam Bankman-Fried, the former CEO of FTX. The investigation focused on assessing the risk exposure to the charity's assets and ensuring trustees fulfill their responsibilities in safeguarding those assets.

Importance of Caution

The Commission's CEO, Helen Stephenson, underscores the importance of exercising caution when engaging with cryptocurrencies. This cautionary stance is vital as the UK aims to establish itself as a crypto hub, reflecting the growing significance of digital assets in fundraising and asset management.

Charities navigating the crypto landscape must stay informed and compliant to protect their assets and maintain public trust. This guidance serves as a crucial resource for managing the complexities of digital currencies effectively.