Responding to a recent proposal by the UK’s Financial Conduct Authority (FCA) to ban incentives, such as free non-fungible tokens (NFTs) and airdrops, crypto industry group CryptoUK has voiced its concern about the potential backlash. The new promotions regulatory scheme, set to take effect from October 8, has sparked fears that it might inadvertently nudge firms into moving their operations outside the UK.
The group, clearly comprehending the need for consumer protection, has underscored that some restrictive aspects of the proposed ban could stifle competitiveness and commercial viability. The plea to the FCA is clear – instead of hanging the sword of an all-inclusive ban, let’s consider the possible ‘unintended consequences.’ Besides forcing firms to relocate, will this cap on ‘crypto enthusiasm’ rip the industry’s evolving UK-based soul?
Back in June, the UK had implemented legislation to oversee cryptocurrencies and stablecoins as part of its post-Brexit financial regulatory reforms. Resultantly, regulators were empowered with the ability to establish a custom framework for the digital asset sector, thereby nurturing crypto’s safe UK penetration. In response, the FCA hasn’t held back from expressing its intention to regulate the sector’s apparent risks skilfully.
Even though CryptoUK agrees on a fair and transparent mechanism for crypto advertisements, the group yearns for further decluttering of the FCA’s existing guidance on the rules. The CryptoUK letter refers to the guidance as ‘limited’, not substantial enough to resonate with the specific characteristics and marketing facets of qualifying crypto assets.
Adding fuel to the regulatory fire, the UK central bank, earlier this week, demonstrated its vested interest in a systemic stablecoin regime, releasing a response to a consultation about the same. The consultation document pitches for clear-cut role allocations among regulatory bodies within the framework, ultimately providing the Bank of England the power to veto any FCA action threatening institutions identified as systemic.
To put things in perspective, just last year, the United Kingdom indicated its resolve to subject systemic stablecoins to existing regulations, with an added focus on maintaining smooth operations and ensuring the return of customer funds. As CryptoUK wrestles with the FCA’s proposal, one thing’s for certain – the future of crypto in the UK is perched on a regulatory highwire. However, with the right balance, the nation can become a haven for both consumers and firms in the crypto landscape. Time will tell.
Source: Cryptonews
