English and Welsh charities are being offered new guidance on accepting cryptocurrency donations, but they must also comply with tax and money-laundering regulations, according to the Charity Commission.
In guidance published on Wednesday, the regulator warned charities that digital assets like bitcoin or non-fungible tokens (NFTs) can be volatile, susceptible to hacking, and hard to trace.
The Charity Commission urged charities to carefully consider whether it is worth accepting cryptocurrency donations and to keep accurate records of all transactions.
Helen Stephenson, the Commission’s CEO, emphasized the risks involved in the use of cryptocurrency and advised trustees to exercise caution.
In July 2022, the Commission’s Assistant Director of Policy, Sam Jackson, suggested that crypto could become a more mainstream investment route, citing successful fundraising campaigns using digital assets in Ukraine, and the UK’s own ambition to become a crypto hub.
However, in light of the risks involved, charities must be vigilant in their acceptance of cryptocurrency donations.
The Charity Commission’s warning comes after it began investigating the Effective Ventures Foundation, which had received significant backing from Sam Bankman-Fried and his exchange, FTX, which filed for bankruptcy in November.