tl;dr
HMRC is getting fidgety. Evernorth will offer a means for XRP holders to avoid the taxman.
Market Snap
Market Wrap
Spot BTC ETF flows have been on a winning streak since 17th August with nine consecutive days of inflows totalling roughly $3bn. Sadly, Friday was an exception with outflows of $200mm but I am quietly confident that was a mere aberration. There is increasing evidence that selling from short-term speculators is almost exhausted. Removing that froth from the market is a prerequisite for a sustained rally higher.
Curious Cryptos’ meme corner
You know it’s true.
Curious Cryptos’ Commentary – UK capital gains tax
No, I am not going to moan about the impending disaster for the country’s finances of aligning CGT rates with income tax (we’ll save that rant for another day). Instead, I note that HMRC has become a little fixated of late about the accurate – or otherwise – reporting of capital gains for cryptos. Letters have been sent out to known crypto investors warning of cataclysmic outcomes of biblical proportions if capital gains calculations are wrong, regardless of whether mistakes are inadvertent or not. Happily, I am not in receipt of one of those letters, which must surely mean the penpushers at HMRC HQ are satisfied by my disclosure. That is the right side of the argument to be on, no doubt.
HMRC has issued an analysis of crypto investors, which makes for interesting reading.
17,600 individuals reported taxable capital gains of £1.38bn on disposals of £13.8bn in 2024/2025 equating to over £78,000 per person. During that tax year BTC rallied from around $68k to $86k, a rise of about 26%. It seems that the average crypto investor would be better off investing solely in BTC rather than a spread of cryptos.
The 240 people reporting gains above £1mm each accounted for £717mm in aggregate – just under £3mm each on average. I think we can safely assume that every one of those is an avid reader of the CCC.
…
James Murray MP, Financial Secretary to the Treasury and Paymaster General, had this to say:
“This important work is supporting the Government’s efforts to close the tax gap, so that everyone pays their fair share towards our vital public services.”
That use of the word “fair” in relation to taxes is ever-present and is so very misleading. Count Binface, in his manifesto for the Clacton by-election, called it right:
“I will lower your taxes and raise everyone else’s.”
Never forget, if you believe you are personally under-taxed, HMRC will gladly accept any additional payments you wish to make over and above your statutory amount.
Curious Cryptos’ Commentary – Evernorth
Evernorth is a DATCO (Digital Asset Treasury Company) focused on XRP. Last October, it raised $1bn and allocated $947mm to XRP. At the time XRP traded around $3 but today sits at $1.37, implying a 50% drop in the mark-to-market valuation of that XRP investment.
Evernorth filed a Form S-4 registration statement with the intention of merging with a SPAC, Armada Acquisition Corp II, to allow it to list on the Nasdaq. Such a move would ease the process of raising capital via equity issuance to invest further in XRP.
The SEC has declared Evernorth’s Form S-4 registration statement effective. It is now up to Armada shareholders to vote in favour or otherwise of the merger at a special meeting on September 30th. I think we already know the outcome of that vote.
Evernorth describes itself as more than just a passive investor in XRP:
“Evernorth is designed to actively manage its underlying treasury of XRP and by so doing expand the utility, value and scale of the XRP ecosystem.”
The attraction of Evernorth compared to just holding XRP is obvious. There are no self-custodial issues. There will be ample liquidity in the shares which will be tradeable using your familiar online stock broking app. Any capital gains or losses will be included in standard stock reporting to the taxman, avoiding one of those warning letters of impending doom we discussed above.
And let’s not forget that the shares will be able to go into your ISA, avoiding CGT altogether, which is better for all concerned.
I suspect that many of the army of vocal XRP supporters will exchange at least part of their XRP stash for shares in Evernorth if and when the transaction closes, slated for Q3 or Q4 this year.