Britain may have to resort to anti-subversion laws, watchdog warns
Britain may need anti-subversion laws to counter threats from states determined to undermine democracy, a government watchdog has said.
Jonathan Hall KC, the independent reviewer of state threat legislation, is due to report this week on using counter-terrorism laws against state interference.
Mr Hall was asked by Home Secretary Yvette Cooper to review whether there were elements of counter-terrorism legislation which could be emulated to address state-based security threats last December.
In particular, he was asked to look at what legal measures would be useful against “highly aggressive state bodies” such as Iran’s Islamic Revolutionary Guard Corps (IRGC).
In a speech to the Policy Exchange thinktank on Monday, Mr Hall will say the internet offers intelligence officers a “perfect way of directly recruiting tasking and paying individuals”.
“Young people who might once have been attracted to a terrorist cause are now willing to carry out sabotage for [Russian President Vladimir] Putin’s Russia,” he will add in the John Creaney Memorial Lecture.
“They are recruited in exactly the same way, by groups operating on Telegram”, an encrypted messaging app, the reviewer says.
Telegram app logo. File pic: Reuters
“I am thinking about the measures that may one day be needed to save democracy from itself. What do I mean? I am referring to counter-subversion,” he is set to add.
Counter-subversion was part of MI5’s role in the 1950s and 1970s but fell out of favour, associated with McCarthyism and infiltrations of domestic protest groups by undercover police, Mr Hall says.
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New laws may now be needed but they would need to come with legal safeguards.
“If I was a foreign intelligence officer, of course I would ensure that the UK hated itself and its history,” he says in the speech.
“That the very definition of woman should be put into question, and that masculinity would be presented as toxic.
“That white people should be ashamed and non-white people aggrieved. I would promote antisemitism within politics.
“My intention would be to cause both immediate and long-term damage to the national security of the UK by exploiting the freedom and openness of the UK by providing funds, exploiting social media, and entryism.”
Pro-Russia groups find ideological affinity with “lone actors” by posing as “protectors of Christian civilisation” and position Russia as a “true defender of crumbling Western civilisation,” he says.
Foreign intelligence agents could already be using social media as a “delightful playground for wedge issues”.
They could seek to use online “sextortion” tactics to obtain kompromat and force individuals to carry out tasking, while they may also be seeking to meddle in Brexit, Scottish independence or the independence of overseas territories.
They could also sponsor contentious foreign policy issues such as Gaza, or amplify the lie that the Southport killer was a Muslim who arrived on a small boat, Mr Hall says.
Foreign intelligence agents could also sponsor contentious foreign policy issues such as Gaza. File Pic: Reuters
They might encourage extreme forms of environmentalism, or policies that would damage adversaries’ economy “or at least sow discord or hopelessness”, the reviewer adds.
Content moderation – removing, blocking, or limiting access to certain content – is “never going to sufficiently address the unprecedented access that the internet accords to impressionable minds,” Mr Hall says.
Legal measures that have proved useful in dealing with domestic terrorist groups may need to be adapted for groups involved in state threats to stop them promoting themselves and inviting support online and offline, he says in the speech.
One answer is the offence of “foreign interference” under the new National Security Act 2023 but proving that a “foreign hand” is at work can be very difficult, Mr Hall says.
Another answer is “social resilience against disinformation” or even “a Cold War mentality that sniffs out subversion”.
“But what if it was necessary to go further? What if it was necessary to investigate, intrusively, the source of funding for protest movements?”
Mr Hall asks if it might be necessary to “bring forward a law, in the interests of national security, banning extremism or subversion”.
He asks if it might be desirable to pass a law banning Muslim Brotherhood candidates from standing in elections.
The Muslim Brotherhood is an Islamist social movement which arose in Egypt in the 1920s but also gave rise to Hamas.
Such laws would be difficult, he acknowledges, because they would have to be based on general principles that apply to individuals equally – such as separatism, hateful extremism, or subversiveness – which have so far eluded politicians.
If such new laws were introduced, they would “need sufficient safeguard in the form of judicial intervention, not cowed by excessive deference to the executive but ready to correct things when they go wrong”, Mr Hall concludes.
A court decision in Australia could open the door to as much as $640 million in capital gains tax (CGT) refunds on Bitcoin transactions after a judge ruled that crypto should be treated as money rather than a taxable asset.
On May 19, the Australian Financial Review (AFR) reported that the decision arose within a criminal case involving federal police officer William Wheatley, who allegedly stole 81.6 Bitcoin (BTC) in 2019. At the time, the assets were worth roughly $492,000. At current market prices, the tokens are valued at more than $13 million.
In the case, Judge Michael O’Connell of Victoria ruled that Bitcoin qualifies as a form of money rather than property, likening the digital asset to Australian dollars rather than to shares, gold or foreign currency.
The interpretation could set a legal precedent, potentially placing Bitcoin transactions outside the scope of Australia’s current CGT regime.
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In an AFR interview, tax lawyer Adrian Cartland said the verdict “totally upends” the Australian Taxation Office’s (ATO) current position.
Since 2014, the ATO has classified crypto assets as CGT assets. This means that users must pay tax when selling or trading them. Under the ATO’s guidance, any disposal of Bitcoin, including selling it for fiat, exchanging it for another crypto or using it to purchase goods or services, constitutes a CGT event.
This framework has been the basis for taxing cryptocurrency transactions in Australia for over a decade. However, the recent ruling challenges the approach by suggesting that Bitcoin functions more like money than property. This potentially exempts it from CGT.
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Tax refunds could reach $640 million
Cartland said it was held that Bitcoin is Australian money. “That is, it is not a CGT asset. Therefore, acquisitions and disposals of Bitcoin have no tax consequences,” the tax lawyer added.
If the ruling is upheld on the appeal, Cartland estimates that there could be potential tax refunds totalling 1 billion Australian dollars ($640 million).
However, while Cartland thinks there could be up to a billion in refunds, the ATO said there were no official figures that confirm the amount to be potentially refunded if the case changes how Bitcoin is taxed in Australia.
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Revolut, a European neobank with crypto support, plans to invest more than 1 billion euro ($1.1 billion) in France and apply for a local banking license.
According to a May 19 Fortune report, Revolut representatives announced the initiative during the Choose France business summit hosted by President Emmanuel Macron in Paris. The London-based neobank also plans to set up its new European Union-serving headquarters in Paris, promising to invest 1 billion euro and hire at least 200 people within three years.
Revolut spokespeople also said that the firm is in the process of submitting an application to the French banking regulator Prudential Supervision and Resolution Authority. According to an anonymous source cited by Fortune, the regulator has been pushing the neobank to get a license to improve supervision due to its popularity in France.
Revolut currently employs about 300 people and serves five million customers in France. This makes the nation the neobank’s top European Union market.
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Aiming for the stars
Revolut hopes to onboard 10 million users by the end of next year and then double that number by 2030. The firm already offers loans, trading and cryptocurrency support in its mobile-first banking platform.
The neobank has seen rapid growth ever since its founding in 2015. The company recently received a $45 billion valuation and reportedly served over 55 million customers as of late May.
Revolut’s 2024 annual report release shows that the firm’s 2024 revenue was 3.1 billion British pounds ($4 billion). A recent Financial News article also puts the company’s headcount at 10,133 employees as of Dec. 31, 2024.
Related: Revolut expands crypto exchange to 30 new markets in Europe
An increasingly regulated institution
Revolut obtained its UK banking license in late July 2024, where 11 million of its customers are located. Now, the neobank is aggressively looking to obtain similar permits across other jurisdictions, with 10 applications underway.
Revolut received the Prepaid Payment Instruments license from India’s central bank earlier this month. This license allows the bank to offer multi-currency forex cards and cross-border remittance services in India.
EU-based Revolut customers now leverage its Lithuania operations. The firm received a banking license in Lithuania at the end of 2018, enabling it to serve customers across the European Economic Area better.
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Dubai’s crypto regulator has given licensed digital asset companies until June 19 to comply with its updated activity-based Rulebooks to enhance market integrity and risk oversight.
On May 19, Dubai’s Virtual Assets Regulatory Authority (VARA) announced that it had released Version 2.0 of the Rulebooks.
The regulator said it had strengthened controls around margin trading and token distribution services, harmonised compliance requirements across all licensed activities and given clearer definitions for collateral wallet arrangements.
VARA’s team will engage with licensed entities and expects the companies to comply with the updated rules after a 30-day transition period.
“In line with global regulatory best practices, a 30-day transition period has been granted to all impacted virtual asset service providers [VASPs], with full compliance required by 19 June 2025,” VARA wrote.
VARA enhances supervisory mechanisms
VARA highlighted that it had enhanced supervisory mechanisms across several regulated activities. This includes advisory, broker-dealer, custody, exchange, lending and borrowing, virtual asset (VA) management and investment, and VA transfer and settlement services.
A VARA spokesperson told Cointelegraph that the updates will bring consistency across all activity-based rules defining core operational terms. The spokesperson gave examples of terms like “client assets,” “qualified custodians,” and “collateral requirements” as some of the terms more consistently defined in the update.
The update also aligned risk management and disclosure obligations, where activities overlap, in areas like brokerage, custody and exchange.
“The aim was to reduce ambiguity and help VASPs navigate cross-functional compliance more easily,” VARA told Cointelegraph.
Related: Dubai gov’t agencies to link real estate registry with property tokenization
Dubai regulator tightens leverage thresholds for margin trading
As for margin trading, the VARA spokesperson said they tightened leverage thresholds, mandated clearer collateralisation standards, and enhanced the monitoring obligations for VASPs offering this feature.
Margin trading allows traders to control large positions with smaller amounts of capital. It amplifies both gains and losses. Tightening the leverage traders use helps limit the risks of widespread liquidations in a market downturn.
The crypto regulator introduced a new section on token distribution that sets out licensing prerequisites, investor protections and marketing restrictions. The spokesperson emphasized the marketing restrictions, especially for “retail-facing offers.”
“It’s about aligning with global conduct expectations and closing observed regulatory gaps,” the VARA spokesperson said.
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