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UK Can’t Afford to Send Mixed Messages on Crypto

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UK Can’t Afford to Send Mixed Messages on Crypto

The UK is leading the way in cryptocurrency services, courting startups and established players alike while pioneering regulation on stablecoins and non-fungible tokens.

But a lot of things have changed. After two years of deliberations, European Union lawmakers have reached an agreement on the regulation of crypto-asset markets (MiCAs), marking a pivotal moment for harmonized sector oversight on such a scale. This followed US President Joe Biden’s executive order recommending a whole-of-government approach to the responsible development of digital assets in the United States.

The UK has also seen major political changes during this period, including the resignation of Treasury Minister John Glen, whose April speech supporting the industry was the most emphatic by a UK official to date. .

While Glen was broadly in favor of a regulated and stimulating framework for the sector, other UK institutions have expressed concern about the safety and viability of cryptocurrency. In fact, on the same day as Glen’s speech, Bank of England Governor Andrew Bailey called the crypto market an “opportunity for the outright criminal”.

It is precisely this kind of mixed message that could hamper the development of the industry just when the gun is fired. Uncertainty breeds stagnation. Evidence suggests that a lack of regulatory clarity has already held back widespread consumer adoption of cryptocurrency.

The industry will not enjoy any comfort until regulators align their thinking.

With a new Prime Minister and a new government on the horizon, it is essential that whoever takes up residence at 11 Downing Street unifies the government’s position with the Bank of England and the country’s regulators so that the UK can become a true leader in technology and innovative standards. setting.

The crypto industry has reached a point where it is both gaining global recognition as a fast-moving fintech incubator and missing out due to inconsistent approaches.

Facing a Tipping Point in the Race for Global Crypto Leadership

The crypto market holds approximately $1 trillion in value. This figure will increase as consumer and business adoption increases, creating jobs, improving financial inclusion and providing new alternatives to legacy systems in the financial services industry.

The UK is one of Europe’s leading fintech hubs and is in a privileged position, equipped with the infrastructure, investment and talent to champion the crypto industry. But to cement that position, it must continue to attract top challenger financial services brands. To achieve this, he needs to take a decisive, one-sided stance on cryptocurrency – consistent with the points delivered by Glen – which shows he is the home for building and growing innovative digital asset businesses. After all, effective financial regulations exist to protect consumers without stifling innovation that ultimately benefits them.

This is not to say that Bailey’s concerns about the possibility of crypto used for illicit activities are unjustified. But addressing this point should not prevent the UK government from demonstrating that it is not afraid of new technologies and the positive changes that cryptography is specifically capable of providing.

To that end, Glen’s statements about delivering a financial markets infrastructure sandbox and creating a crypto-asset engagement group are welcome steps that we believe will enable the UK to continue to serve as a leader in this space in active collaboration with the industry.

The Value of Having a Unified Approach to Crypto Regulation

It is also important to take a single, unified approach to crypto regulation. With MiCA, the EU is setting the bar and should be applauded for demonstrating the benefits of a unified approach to crypto regulation.

As the UK considers additional regulation in this area and the new Financial Services and Markets Bill makes its way through parliament, it would fall to the UK to build on the EU’s approach with the MiCA, working with industry and consumers to discourage uncertainty and doubt.

Likewise, the upcoming consultation on the government’s approach to crypto assets represents a good opportunity for policymakers to hear from the industry on how best to craft the regulations that will protect businesses and consumers alike. allowing innovation to thrive.

Of course, building regulations are only part of the puzzle. Communicating government policy to those subject to regulation is as important as policy makers understanding the industry they regulate. To this end, strong public-private collaboration is essential to adapt financial regulations to new technologies.

Only through a unified approach to crypto regulation will companies have confidence that they are operating in a market where authorities are fully invested in the success of the industry and where consumers can feel protected by a effective regulatory oversight.

To ease the current period of economic uncertainty, the UK will need to rely more on its flagship industries, such as fintech, to drive growth, create jobs and help the country ‘build back better’. To achieve this, it must encourage innovation in digital assets underpinned by a resilient and comprehensive regulatory framework. At this early stage, with a number of countries looking to grab the crypto crown, the UK cannot afford to allow mixed messaging to thwart its crypto ambitions.

The opinions expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph. This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice.

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