Being cautious about cryptoassets
BDB Pitmans
In an article for Charities Management, a partner in our charities team highlights how a statutory inquiry by the Charity Commission serves as an important reminder for charities utilising cryptoassets.
On 19 December 2022, the Charity Commission opened a statutory inquiry into the charity Effective Ventures Foundation (EVF UK) after they reported the bankruptcy of FTX in the US to the Commission as a serious incident. This was filed on the basis that the Charity received a significant amount of funds from both individuals and FTX-linked entities (including the FTX Foundation). It has since been announced that the company is being investigated on the lines of being a Ponzi scheme. Its co-founder, Sam Bankman-Fried, was a proponent of ‘effective altruism’, an intellectual trend in philanthropy that aims to use unbiased research to determine the best strategies for helping others.
‘As the Commission noted in its cautious first blog on ‘Cryptocurrencies: what are they, and should charities use them?’ (published 12 July 2022), trustees should follow its guidance, as standard, on core trustee duties, on making effective decisions and on investment when taking decisions in this area. It goes without saying that trustees should ensure they have carried out appropriate due diligence on donors and associated organisations, whatever the form of donation.’
They also discusse the consultation published by HM Treasury and the Bank of England which looked at the potential case for a blockchain based UK central bank digital currency – a ‘digital pound’, akin to pound sterling, forming a new digital money for use in UK businesses and households.
Read the article in full on the Charities Management website.
With cryptoasset technologies rapidly evolving, the law around cryptocurrencies is constantly updating to ensure safe and effective protection for its users.
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