UK-based charities that accept cryptocurrencies must maintain accurate records of their income and adhere to tax and money laundering regulations, according to guidance published on April 26, 2023, by the UK Charity Commission. The regulator cautioned charities about the risks associated with dealing with cryptocurrencies such as Bitcoin (BTC) and Non-fungible tokens (NFT), which are volatile and difficult to trace. Helen Stephenson, the Commission’s CEO, advised trustees to exercise caution when considering accepting such assets as payments or donations.
Although the Commission’s Assistant Director of Policy, Sam Jackson, previously identified crypto as a potential mainstream route for investing, trading, and moving assets, it warned charities to carefully consider their exposure to risk before accepting crypto assets or NFTs. The Commission has initiated investigations into the activities of the Effective Ventures Foundation, which reportedly received support from the FTX’s former CEO, Sam Bankman-Fried, and his exchange.
Charities that continue to accept crypto assets or NFTs must develop policies to accept, refuse, and use such assets, including decisions to convert them to traditional currency. Additionally, they must ensure that platforms receiving such funds comply with UK regulations and are registered with the FCA for anti-money laundering and counterterrorism, as required.