Over time, and certainly in the past year, with good reason, cryptocurrency has changed by association from being a salacious method of money laundering to becoming a serious contender for a profitable investment. More and more novice investors are dipping their toes in the metaphoric water and even large brands (Starbucks, Amazon, Paypal, to name a few) are starting to accept cryptocurrency as a form of payment. As more money is being converted into cryptocurrency, these types of assets are becoming more prevalent in insolvent estates. As a result, it’s important to explore what this really means for creditors of companies or bankrupts who have invested in cryptocurrency.
Because cryptocurrency is decentralized, in other words, it’s not tied to a country’s currency, nor is it regulated, it is widely viewed as an easy method of defrauding people. However, that is not necessarily the case. All transactions are public knowledge, meaning ownership can be verified and traced. Because there isn’t one controlling body, everyone is accountable to everyone. This transparency is a security feature in itself as it is difficult to hide in plain sight, as it were.
There is, however, a hurdle that remains of learning new terminologies and understanding a new process. As a result, many people shy away from dealing with it. This can seem daunting and is certainly a barrier to entry for some. However, it isn’t a reason to ignore what could potentially be an immensely fruitful asset pot. Professionals must now start to change their perspective on cryptocurrency, particularly in relation to company investments in insolvency estates, and adapt processes to enable us to deal with cryptocurrency more effectively. Gone are the days of solely dealing with traditional assets.
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.