The UK’s proposed legislation for the cryptocurrency industry has received overall positive feedback from stakeholders. However, there is a strong desire for the country to collaborate with global regulators to avoid post-Brexit isolation, especially in light of the European Union’s Markets in Crypto Assets (MiCA) regulation. Establishing regulatory clarity in the UK will help accelerate the adoption of beneficial innovation while reducing criminal and financial risks, according to Riccardo Tordera Ricchi, head of policy at UK-based The Payments Association.
Unlike MiCA, which aims to create a whole new set of rules for the crypto space, the UK intends to bring cryptocurrencies within the scope of its existing regulatory frameworks. The government may also publish crypto-specific rules within the next 12 months. The UK’s plan to regulate crypto assets under the Financial Services Markets Act, having an authorization regime for digital asset companies, and regulating stablecoins under the country’s payment rules demonstrates a different approach than the EU’s focus on the assets themselves.
CryptoUK, a UK-based lobby group, supports the government’s “same risk, same regulatory outcome” approach. Furthermore, Changpeng Zhao, CEO of Binance, praised the UK’s strategy for capturing the intricacies of novel innovations and their unique benefits and risks. However, the Association of Financial Markets (AFME) in Europe affirmed that the UK cannot go on its crypto regulation journey alone – it must ensure that its regulations are compatible with other jurisdictions that host global crypto companies.
AFME also warned that the UK’s planned crypto authorization regime could damage its reputation as an open market by making it difficult for foreign firms to access it. CryptoUK echoed this concern and called for overseas companies to be exempt from local authorization, with the government focusing on regulating UK-based companies. They also called for UK authorities to align with global regulators over disclosure requirements for crypto companies.
As the UK’s Conservative government aims to position the country as a hub for cryptocurrency, with general elections looming, CryptoUK expects proposed stablecoin legislation and rules for the broader crypto space to be implemented by the end of 2024. In order for the UK to achieve its goal of becoming a global hub for the crypto industry, it should apply proportionate financial promotion rules, address de-banking concerns, and implement a progressive tax policy that addresses the nuances of the asset class.
Source: Coindesk
