14 July 2022 by Ella Braidwood
The Charity Commission has urged charity trustees to consider the risks of using cryptocurrency.
The commission told trustees that it was important to document their decision-making if they did decide to invest, or take donations, in cryptocurrency.
Sam Jackson, the commission’s assistant director of policy, wrote in a blog this week: “Trustees who do decide to dip their toes in the crypto water should document their decision-making carefully.
“Remember that if problems arise, the commission might need to get involved, and we’ll expect to see evidence that you fulfilled your legal duties and responsibilities and did not put your charity’s assets – including its reputation – at undue risk”.
Cryptocurrency, or crypto, is a digital currency designed for use as a medium of exchange that is not reliant on a centralised system, such as a bank or government, to maintain or uphold it.
Bitcoin became the first decentralised cryptocurrency when it was released in 2009. Cryptocurrencies use blockchain technology to secure and record transactions.
The commission stressed the importance of charities being able to identify donors, which it said “can be tricky in the context of cryptoassets, as the blockchain relies on – indeed in some ways is designed to guarantee – anonymity and secrecy”.
It said that trustees should “take appropriate professional advice” when considering investing in cryptocurrency, and encouraged trustees to read its publications on the core duties of trustees and its investment guidance.
The blog added: “As things stand, we consider that trustees should think very carefully before investing in cryptocurrency, evaluating the benefits and risks as they would do with any important decision about their charity.”
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