HELP! - Complex UK Crypto Purchase

[DavidMJHowells]

Hi all,

I have a complex question I need answered from a UK law perspective.

I and 9 friends each want to buy 100 coins of a specific cryptocurrency so that between us we have 1000 coins to set up a masternode and hope to make gains.

Some of these friends do not have the technical expertise to buy Bitcoin / Ether and send that to an exchange to transfer into the required currency and set up a wallet to send me their stake.

Because the amount is fairly large, I’ve been wanting us all to send fiat to a UK bank account and I’ll take care of the whole process. I’m getting resistance from the bank that this is a buinsness and from legal that I need to create a Ltd or partnership.

My question is that can I facilitate the purchases without a buisness or what is the best way to go about this. If 10 people want to purchase an asset, we should be able to remain as individuals? This is important because we are each within our rights to buy the assets and make capital gains. If we become a single entity we become subject to financial regulations, not to mention taxes.

Fundamentally, what are the legal requirements that I would need to meet to buy cryptocurrency on behalf of multiple friends?

Thanks in advance if anyone can help!

[Wheelige]

Hey,

To my knowledge there is no legal requirement/hoops you need to jump through in order to purchase cryptos on behalf of friends.
However certain exchanges state in their terms and conditions that you are not using the account for others etc so this would be a good thing to look into before entering the market.

If it were me entering this 'venture' i would have a record of payments and maybe a memorandum of understanding between me and my friends, just in case of future debate/Inland Revenue interest.  - Depending on the size of transaction the bank will be making i believe there are reporting requirements so banks are generally cautious of moving around large amounts especially offshore.

While I'm not sure on the coin or means of 'gains' the coin will offer having a masternode, but it sounds like youll be making income not increasing the value of your coins, so this would not be a capital gain, it would be income which would be taxable. Dividing this up again all your friends would be easier if there was a partnership arrangement.

Remember to be very cautious before putting money into something, especially as the general rule with crypto is done put in what you cant afford to lose. 

[avikz]

If you are going through a bank and if they knows your nature of business, then Bank will always ask for partnership deed. because you guys are mainly creating a pool fund to buy a particular crypto asset in one chunk. I don't think, you can legally create pool fund to purchase an asset as an individual. You need to have a Memorandum of understanding signed at least.

So instead of taking that route, you can educate your friends how to purchase the crypto asset from an exchange. If you want to avoid the legalities, that's the best way to do so. Probably you want to sit with them and walk them through the purchasing process. I don't see any other way out. If you are going through banking route, you have to comply with legalities.

[Manoharachan]

It's very hard for you to do, you should just buy a crypto with just one person to join making assets but it is also high risk.