Storm Brews As Cryptos and Central Governments Collide

There’s a big storm brewing over the resurgence of cryptocurrencies. The adoption of Bitcoin as a means of payment by the like of Paypal has prompted some panicky measures by central government and their regulators.

The US Securities and Exchange Commission is gearing up to take enforcement action against Ripple and its digital asset XRP.

Ripple has long faced allegations that XRP – the foundationaly cryptocurrency used to grease the wheels of it blokchcain-based remittance network – is in fact a security owned and controlled by the firm.

Ripple is currently in a legal battle with investors who say it is selling unregistered securities and making misleading statements about XRP.

If XRP is labelled a security, it would be subject to strict rules that would impact Ripple, which still owns more than half of all the cryptocurrency.

Ripple has pre-empted the SEC enforcement action with a string of rebuttals on its website and twitter, amid hints that it is prepared to move its business to a more amenable country such as the UK or Japan, where the FSA has already ruled on XRP’s status as a cryptocurrency.

The firm contends the SEC’s theory, that XRP is an investment contract, “is wrong on the facts, the law and the equities.

“To prove its case amounts to an unprecedented and ill-conceived expansion of the Howey ​test and the SEC’s enforcement authority against digital assets.”

Ripple points out that since 2017, around 90% of its XRP holdings have been held in an inaccessible escrow, which cannot be unilaterally terminated. The escrow is intended to standardize the supply of XRP that could come from Ripple, even during times when the price andvolumes of XRP have increased.

Ripple chief Brad garlinghouse contends that departing SEC chairman Jay Clayton is “taking notes from the Grinch this holiday season”.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 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.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

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:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.