Press Room

27 Sep 2022

Crypto Tax Newsletter – First Edition


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Andersen LLP

September 2022

Hello, I am Zoe Wyatt and I head Andersen’s Crypto Tax & Accountingteam in the UK. Welcome to our very first Crypto Tax Newsletter (CTN)!

The CTN will be published every 8 weeks and consist of our thoughts and views on the tax outcomes of important sector events, developments in international law, as well as feature a topical case study.

Each member of the team will take turns to write the CTN sentiment, explaining how they got into crypto together with anything they’re finding interesting or that excites them (I can’t wait to talk about soul bound tokens or our plans for Andersen in Decentraland, but that’s for another time). You can find the team bios here.

Reflecting that the digital world moves faster than the real world, the CTN will be supported with one-off blogs and podcasts on issues that would otherwise be old news if we waited for the next one to come round! You can also find historic articles and press commentary here.

Last Friday we saw the UK government announce its ‘mini-budget’, but there was nothing small about it. Whilst no direct impact on the crypto sector, we understand that, through our work with the Crypto Tax & AccountingAll-Party Parliamentary Group, the new ministers are pro crypto, pro deregulation, pro business and want that business here in the UK. If the government is willing to tear up the rule book, as evidenced by its budget shake up, we can be hopeful that there is serious consideration of reform to the taxation of cryptoassets. Perhaps crypto to crypto transactions will no longer constitute a disposal, we might see a tax-free wrapper and, just maybe, a consultation on a separate set of tax rules for cryptoassets (as opposed to making existing rules work). If the UK gets this right, we expect other jurisdictions to follow. Not only putting us ahead of the curve, but also providing some much-needed certainty for the sector across the globe.

In this first CTN we highlight our response to HMRC and the Treasury Committee’s calls for evidence, our musings on the tax impact of ‘the Merge’, how information reporting may be changing with the OECD’s Crypto Asset Reporting Framework and who it affects, and a case study on DAO legal wrappers (a series of case studies can be found in the Crypto Tax & Accountingsection of our website).

You can click through to each of the articles below and, in case you need it, we have included an ever-evolving glossary of terms here.

I hope you enjoy this (long) first edition of the CTN and welcome your feedback. Happy reading!



1. Andersen responds to HMRC and Treasury’s Calls for Evidence 

2. Tax & the Merge

3. Crypto tax transparency

4. Case Study 1: DAO Legal Wrappers

5. Zoe’s story

Andersen responds to HMRC and Treasury’s Calls for Evidence 

As the UK aspires to be a global crypto-hub positive overtures have recently been made towards the cryptoasset sector in the UK with two separate calls for evidence being released. We have provided a written response to both, very separate, calls that you can read here.

A Treasury Committee has been launched to examine the potential risks and opportunities for the use of cryptoassets. Broadly this inquiry is reviewing:

●    the role of cryptoassets in the UK;
●    potential impact of DLT (Decentralised Ledger Technology) on financial institutions; and
●    the regulatory response to cryptoassets.

It will be interesting to see the views that have been provided and, more importantly, what changes may follow. Industry (including us) has long said that the UK’s regulatory environment is not ideal.

Surprising some in industry, over the summer, HMRC released a call for evidence on Decentralised Finance (DeFi). DeFi is a broad topic that can provide virtually any financial service in a decentralised manner. The call for evidence was focused on the ability to lend using cryptoassets. The background to this call for evidence is particularly notable as HMRC had recently released guidance on the topic which had not landed well. It is clear that the aim is to provide an approach that better follows the economic reality of the transaction. In the meantime, the rules for DeFi lending and staking are quite complex.

Tax & the Merge

The merge has been long in development going back to 2016 with the Ethereum Mainnet now using a different consensus method than Bitcoin. This is called Proof of Stake (PoS) rather than Proof of Work (PoW). The main outcome is that Ether will no longer need miners with their expensive and energy hungry computers in the same way that Bitcoin does. The Ethereum Foundation believes that this change will result in a reduction of energy costs by more than 99 percent1. It is quite a change.

As the dust starts to settle, as with all things in the crypto space, there is always tax to consider. To date HMRC has not publicly stated its view on this development. HMRC’s recently released market research2 highlights that understanding of tax and crypto is not as good as it could, or should be. However, we are here to help guide on this and other topics. To start with there are four possible outcomes with differing tax treatments:

●    Soft fork
●    Hard fork
●    Airdrop
●    One way transfer

Hard or soft fork?

There are two ways the code could be changed: either a “soft fork” or a “hard fork” and the tax consequences are significantly different.

In the case of a soft fork the “community” agrees to the changes and the token effectively continues as it is. Therefore there is no change to the tax position. However, not all in the Ethereum community have seen the merge as a positive development with Proof of Work being considered by some as more secure.  At the time of the merge a separate token EthereumPoW (ETHW) was announced which would create, from that point, two chains and two different tokens ETH and ETHW – this is a hard fork. Despite some initial issues, which appear to be resolved, last week Binance completed the distribution of ETHW tokens to eligible holders.

Internationally there are differing approaches to how hard forks are treated – in fact the UK tax administration HMRC is one of the few that have a public position on this. The guidance is at CRYPTO223003. HMRC considers that as this is an asset derived from another asset you will need to apportion the value of any ETHW that has been received “on a just and reasonable basis”, however the guidance does not explain how to arrive at what is just and reasonable. In the UK the good news is that there is no tax liability on receipt of the tokens, only when they are subsequently sold.

If tokens are provided, could this be an airdrop? Certainly some have likened this activity to an airdrop and this is where the lack of consistent terms is unhelpful. The HMRC position for an airdrop could create a miscellaneous income tax charge upon receipt of the tokens. However, HMRC likens an airdrop to when “an individual receives an allocation of tokens. For example, tokens that are given as part of a marketing or advertising campaign.” This does not appear to fall into this category; however, it cannot be ruled out that HMRC may take a different view.

Finally, there is a one-way transfer. In the lead-up to the merge Ethereum was upgraded to Ethereum 2.0. This was not technically a replacement to Ethereum and enabled a return to be provided to the owners, also called “staking”. Following a recent and helpful addition to HMRC guidance the one-way committing of tokens from version 1.0 to 2.0 is not seen as a taxable occasion, but this does, as always, depend on the facts.

Due to the size of the Ethereum community and the lack of understanding of crypto it seems that an HMRC brief could be helpful, if not absolutely necessary.

The environment, quite rightly, has been perhaps the main headline. It is hard to ignore the energy usage of Bitcoin exceeding that of many countries4. This has been commented on at some length in other quarters and we will only add that it is a more finely balanced topic than it may first appear. However, it cannot be ignored that PoS uses significantly less energy than PoW. Will this now start to change the perception of policy makers and others that all cryptoassets are not created equally? Only time will tell.


Dion Seymour 
Crypto Tax and Accounting Technical Director
M: +44 07375 804 498 or

Crypto tax transparency 

Transparency may seem at odds with the ethos of cryptoasset and many refer to this sector as the “wild west”. However, with the introduction of the 5th Money Laundering Directive (MLD5), regulation of the cryptoassets sector has arrived and is now expanding. For those operating in many jurisdictions there are obligations that cannot be ignored.

To date most regulation (and proposed regulation) has focused on firms rather than providing information to tax administrations for those that may have tax to pay. Soon this may become very different. The OECD has been developing a new framework for the information reporting of cryptoassets: the Crypto Asset Reporting Framework (CARF). This is a landmark in the development of international tax transparency for cryptoassets.

The technical text of the agreement has been drawn up by the OECD and it is now going through the process of agreement. This was not a hastily produced position and development of the CARF commenced in 2018. Careful consideration has been given, with the UK’s HM Treasury and HM Revenue and Customs taking a key role in discussions, to ensure that the reporting is reasonable and proportionate. However, understandably, there are concerns in industry in terms of the additional burden this will place on already stretched exchanges and start-ups/creators

It can be easy to consider CARF as an extension of the Common Reporting Standard (CRS), however the information being exchanged is quite different5. Notably, unlike CRS, the US is anticipated to sign up to CARF.

What information will CARF provide?

The OECD’s approach to CARF builds on the regulatory provisions from MLD5. Relevant Crypto Asset Service providers (RCASPs) will have an obligation to report on transactions including:

• exchanges between cryptoassets and fiat currencies;
• exchanges between one or more forms of cryptoassets; and
• transfers of cryptoassets (including Reportable Retail Payment Transaction).

CARF contains no motive test or ability to avoid disclosure by stating that your tax affairs are in order with the information being shared between tax administrations automatically.

A proposed new reporting requirement has been included in CARF: the ‘Reportable Retail Payment Transaction’ (RRPT). RRPT places an obligation for the reporting of certain retail transactions where an RCASP has been utilised to facilitate the payment.

A new standard?

The speed and pace of implementation has yet to be agreed. Once negotiations are concluded there will be considerations on global adoption and commencement. At which point there will be consideration as to whether it may become a standard and the level of flexibility jurisdictions will have for implementation.

Established players and start-ups will also need to factor in these requirements as part of the structuring of the business which will be an additional cost and time resource. CARF will have a dual impact, firstly that RCASPs have the necessary required information and secondly the infrastructure to regularly report in a timely manner.

The collection of some of the data could be a challenge and we have expressed to HMT and HMRC that there will be clear guidance around the application of the CARF. We remain confident that this will happen.

The cryptoasset world is becoming increasingly small and ever more visible. The increased ability for tax administration and regulators to identify transactions and more importantly those behind them should be making everyone take note.

Transparency in this sector is important, however it has to be balanced so as not to stifle innovation. Concerns have been raised by industry about who would be treated as an intermediary, a Crypto Asset Service Provider (CASP) and the impact on administration and cost burdens for smaller CASPs including start-ups and creative digital providers including NFT creators.

CARF will provide HMRC with unprecedented information on cryptoassets and, as with all datasets, it will be used to identify where there is potential tax risk. CRS was greeted with a lot of excitement by tax administrations, and it is easy to see that CARF will be met with similar keenness to exploit the newly acquired data.

5. Note that CRS is being updated to include elements where there are crossovers. For example Central Bank Digital Currencies (CBDC) are to be considered as a Specified Electronic Money Product with reporting to be part of obligations under CRS. 

Laura Knight
International & Crypto Tax Director
M: +44 07843 264 281 or

Dion Seymour 
Crypto Tax and Accounting Technical Director
M: +44 07375 804 498 or

Case Study 1: DAO Legal Wrappers

As we wait for the UK Law Commission to publish its call for evidence on the legal status of a DAO, we draw the spotlight on our Case Study 1: DAO legal wrappers.

The Law Commission describes DAOs as “a new form of online, decentralised organisational structure. They are generally member-led, with bespoke governance and some form of treasury (often denominated in crypto-tokens). They are increasingly important in the context of crypto-token networks and many DAOs hold assets of significant value, but their legal, regulatory and tax status is unclear.”

There is significant uncertainty with DAOs, from fundamental legal questions to how they operate. For example, from a legalistic perspective, can a DAO be said to have a separate legal personality such that it can hold assets, enter into contracts, whether it’s capable of being a company, LLP or general partnership or some other type of novel entity?  For the operation of a DAO, who is liable if something goes wrong and who is responsible for the regulatory, reporting and tax obligations? Until there is greater certainty we have structured all our client DAO projects through a legal wrapper. Designing the legal and operational structure to support a path to decentralisation and reflect the objectives of a DAO; incentivising cooperation, innovation and participation, levelling playing fields, removing human error, lowering costs and increasing transparency.

You can read more about our approach, types of structures and jurisdictions here.

Zoe and Dion are co-chairing the CryptoUK DAO working group. If you would like to get involved, please contact us:

Zoe Wyatt 

Partner and Head of Crypto & Digital Assets
M: +44 (0)7909 786 144 or

Dion Seymour 
Crypto Tax and Accounting Technical Director
M: +44 07375 804 498 or

Zoe’s story

I have been an international corporate tax specialist for 15 years. I have advised fast growing privately held companies on their international expansion, global reorganisations including offshoring of assets, functions and risks, as well as considering how matters at the corporate level would impact on the shareholders.

My approach to cross-border tax structuring is holistic. I apply my knowledge of international tax systems and use a database of domestic and international tax laws to develop the blueprint solution, to ensure that it works for all parties involved, across all taxes and all relevant jurisdictions. I then work with my overseas colleagues to refine or sign off my plans.

My clients grew quickly over a short period, with no fully fledged finance function, and certainly no in-house tax function. My role very quickly moved beyond technical to strategic and that of trusted adviser.

I worked with a number of tech companies and had a special interest in the taxation of IP. When a UK based start-up wanted to undertake an Initial Coin Offering (ICO) in 2017 out of Hong Kong, it came across my desk because of the international flavour, but also because I was fascinated to understand the nature of the IP and how it would be monetised. Having at that point little or no awareness of the concepts that Web3 embodies (I wasn’t even familiar with the terms Web1 or Web2!).

I spent the next 12-24 months immersing myself in all things crypto; reading about the blockchain revolution and listening to podcasts. Regrettably, I didn’t actually buy any crypto until much later! That period seemed largely doom and gloom with the last crypto winter and mainstream media reporting on numerous ICO scams. But in 2019, there was a new buzz and amongst non-crypto folk (noobs), so I decided to study blockchain strategy with University of Oxford’s Said Business School. I needed sufficient knowledge to ask my clients the right questions so as to apply existing tax law and, equally, to distinguish between a swindle and a genuine project. Whilst I was sold on how blockchain could change the future, it still felt something very far away, with for example issues of interoperability still to be solved.

In 2020, I won my first DAO client. It was as if my entire career had been purposely constructed for this moment: a new asset class and operational model that required challenging the information provided and intrepidly forming a view as to how existing UK and overseas tax law would apply, and no in-house finance, tax or legal functions allowing me to project manage multi-discipline and multi-jurisdictional parties and the client to focus on the impending ICO and technology build.

The referrals snowballed and I have advised on c.30 DAO / community driven Web3 projects.  Our Head of Incentives, James Paull, with over 20 years of share scheme planning was soon advising on tax efficient founder token allocation and employee token pools. Our Head of Accounting, Jonathan Nehard, had his crypto baptism reviewing white papers to create revenue recognition policy for token sales where they could not be used for their primary utility, before heading off for a part time client secondment to a metaverse project.

Helen Siqin, an international corporate tax specialist, joined the team last year from PwC’s national technical team and has been invaluable drawing on her indirect tax experience to form a view on the VAT, GST and SALT position for NFT sales.

I got to know Laura Knight through co-founding the CryptoUK tax primary working group and her vocal and blistering on point feedback during HMRC and OECD roundtables! I knew Laura would be the perfect fit for us and she joined the team earlier this year. Laura is private client focused and has been specialising in crypto since 2017. Like both Helen and me, Laura is an international tax specialist and ideally placed to advise Web3 founders and crypto investors spread across the globe. Laura also brings significant investigations experience, which we will be drawing on significantly as crypto related tax enquiries start to increase.

Finally, we have the pleasure of announcing that earlier this month, Dion Seymour joined us as our Crypto Tax & Accounting Technical Director having formerly been Cryptoasset Policy and Product Owner at HMRC. His extensive and unique experience brings an in-depth knowledge on direct and indirect taxation for individuals and businesses, the OECD’s Crypto-Asset Reporting Framework (CARF), and HMRC investigations. He has a fantastic reputation amongst other professional advisers and key industry players and is a seasoned speaker.

That brings us to the present day, and I should probably say something prophetic or insightful as to what comes next: 2020 was the year of DeFi, 2021 the year of NFTs and 2022 the latest Crypto Winter. I believe 2023 will be a difficult year for cryptocurrencies, but the technology will continue to evolve and Web3 projects will continue creating innovative assets and models. Whatever 2023 holds, we will keep doing what we do best – reading, learning, evolving our views, advocating for change, educating and growing our team.

Download our team flyer here.

Zoe Wyatt 
Partner and Head of Crypto & Digital Assets
M: +44 (0)7909 786 144 or

Andersen LLP, 80 Coleman Street, London, EC2R 5BJ

Tel: +44 (0)20 7242 5000
Fax: +44 (0)20 7282 4337  |

The content of this newsletter and any subsequent updates we send do not constitute tax or legal advice and should not be acted upon as such. Specific tax and / or legal advice should be taken before acting on any of the topics covered.

Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 4,500 professionals worldwide and a presence in over 149 locations through its member firms and collaborating firms.


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