CRYPTO41260 - Cryptoassets for businesses: Corporation Tax: Transferring tokens between distributed ledgers
Transferring tokens between distributed ledgers
Tokens cannot simply be transferred from the distributed ledger for one cryptoasset to the distributed ledger for a different cryptoasset. For example, a bitcoin cannot exist on the Ethereum blockchain. An effect comparable to a 바카라 사이트˜swap바카라 사이트™ can be achieved using a smart contract and secure public address. The holder of the tokens uses a smart contract to transfer tokens to a public address that they don바카라 사이트™t control. An equivalent amount of tokens of the second cryptoasset are transferred from a secure public address to a public address controlled by the person.
The question that arises is whether this type of transactions results in a disposal for CGT purposes (for guidance on the general interpretation of disposal see CRYPTO22100, /manual/cryptoassets-manual/crypto22100). HMRC바카라 사이트™s view is that the answer will depend on the facts.
바카라 사이트˜One-way바카라 사이트™ transfers
Some transfers can only go in one direction, meaning that once the transfer has been made it cannot be undone or transferred back at a future date.
An example of this can be seen with the Ethereum blockchain. Currently ether are on the Ethereum 바카라 사이트˜mainnet바카라 사이트™ (short for main network, the main public Ethereum blockchain). Holders of ether can choose to transfer their tokens from the mainnet to a different blockchain called the 바카라 사이트˜Beacon Chain바카라 사이트™. The Beacon Chain blockchain is where Ethereum바카라 사이트™s 바카라 사이트˜Proof of Stake바카라 사이트™ will be implemented (for more information on Proof of Stake see CRYPTO10300, /manual/cryptoassets-manual/crypto10300). It will be impossible to transfer ether from the Beacon Chain to the mainnet, making transfers a one-way process only.
HMRC바카라 사이트™s view is that TCGA92/S43 applies to this type of transaction. The allowable costs in respect of the first cryptoasset are attributed in full to the second cryptoasset. A gain or loss will accrue as normal on a subsequent disposal of the second cryptoasset.