Well, what’s hot in in FinTech in this much-heralded “hottest day ever” in the UK? One possible answer is Non-Fungible Tokens (NFTs), a topic of great interest – and of course the concern that novelty always brings. In the heat haze, here’s an opportunity to pause and reflect, afforded by our friends at Crowdfundinsider.
Non-fungible tokens, commonly called NFTs for short, have become an increasingly popular digital asset, especially in light of some eye-popping sale transactions involving Jack Dorsey’s first tweet, Bored Ape NFTs, NBA Top Shots Moments, and a number of other digital works of art. However, like other blockchain-based digital assets, NFTs raise some interesting and novel legal questions.
As the name suggests, NFTs are different from other types of crypto-tokens because they are non-fungible, meaning that each one is unique and cannot be exchanged for another identical token. This is unlike, for example, Bitcoin; if you hold a Bitcoin, you can exchange it for another Bitcoin, and there is no difference. Each NFT is one of a kind. In some cases, this is literally true; in other cases, an NFT may be one of a limited number of a similar tokens, with each one uniquely numbered. In the latter instance, earlier numbered NFTs may be more valuable than later numbers.
Before discussing this question, please note that the standard disclaimer for blockchain-related legal issues applies. In other words, the law in this area is uncertain and rapidly evolving, both in terms of the courts and in terms of federal policy and legislation. Several pending court cases and proposed laws could alter this landscape very quickly.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.