Despite the recent turmoil in crypto markets and the bearish view of many investors who are opting out, most analysts agree that crypto is here to stay.

Although there have been a few crypto winters to date, where crypto has crashed in value, the crypto industry is now in a position to work through its growing pains and hopefully transition to something more secure, accessible and mainstream.

So could this be the time to start-up a crypto-related business?

What kind of crypto businesses are already in the market?

The most well known type of crypto-related business is trading in tokens for profit,but this is certainly not the only crypto-related business on the market.
As you can imagine, the crypto industry requires a whole range of technological support to run effectively, including the servers the exchanges run on, payment providers to the e-commerce marketplaces and social media platforms crypto holders trade and communicate through, such as etoro.

Some examples of crypto-related business options include:

Crypto exchange
Technology solutions provider
Payment processor
Digital security
Marketing and PR
Crypto-based marketplace
Trade and/or index tracker
Asset management
Crypto ATMs
Crypto gaming/apps

Clearly there are a wide range of options available to enter the crypto market as demonstrated in the above list. Block (SQ) recently published a report called ‘Bitcoin Knowledge and Perceptions’ which showed that the market can be split several ways. Higher income individuals see bitcoin as an investment opportunity and a potential way to grow their wealth, whereas lower income earners and those in underbanked or unbanked economies view it as a way ‘to send money to others’. Both of these groups also view crypto as a way to buy goods and services.

What does it take to run a crypto company?

You must decide firstly which part of the crypto market you fall under legally, whether you are trading, a marketplace, a payment provider or a gaming platform.

We strongly recommend you get advice to ensure you fall into the correct legal structure when you start as you may end up paying too much tax if you do not choose the correct structure for your business from the outset.

UK Crypto Tax Help

Other legal considerations include making sure you have the correct permits, insurance and know your accounting and tax obligations for your chosen business model.

If this is the route you want to go down, you will likely have the passion and knowledge of the crypto market and likely be part of the crypto community in some way.

A crypto business does have all the features of running a standard business plus added complexity as consumer behaviour is very different different in the crypto space.

There is also no doubt that the crypto market uses complex technology and jargon, so you need to make sure you are well informed, to then fully understand the risk and rewards.

So we suggest do invest your time in training and educating yourself on the crypto market, if you are not doing so already and start to build a network of people around you that you may need to use in your crypto business, such as web3 developers and engineers.

More widely, there is some headway to be made in the legitimacy of the crypto market and to be a credible player in the field and to be taken seriously, it will take time, effort and consistency in your marketing approach.

Be clear in your service offering, deliver what you promise and stay in tune with changes via your peers in the crypto market

What will the crypto market look like within the next five years?

Despite the volatile nature of the crypto market currently, many commentators view crypto similar to the rise of the internet and e-commerce and will become mainstream within the next five years.

So most people will have some sort of cryptocurrency wallet that they use to make either real life or online transactions and inevitably there will be a rise in crypto investments.

This highlights the importance of understanding your tax liabilities as crypto activity becomes more common and you may get caught out with a higher tax burden if you do not plan properly.

Contact us to see how we can help you manage your crypto assets compliantly and tax efficiently

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