Regulators in the U.K. have been keen on pulling the cryptocurrency industry out of the regulatory grey area and recent developments in the nation have echoed the same intent. Now, Her Majesty’s Treasury has called for the introduction of a new UK regime for the regulation of crypto-assets with an HM Treasury-ordered review of UK fintech.
After some anti-crypto moves from lawmakers in the UK, like the ban on the sales of crypto derivatives and exchange-traded notes to retail users and the “Temporary Registration Regime,” that requires crypto businesses operating in the nation to be registered under the FCA, it has been suggested that local start-ups in the industry could move to crypto-friendly jurisdictions.
The review, which was announced in chancellor Rishi Sunak’s debut budget back in March 2020 and spearheaded by former Worldpay boss Ron Kalifa, voices these concerns. It outlines that other economies are progressing rapidly with the development of crypto-specific frameworks such as the EU’s Markets in Crypto-Assets proposals, and urges the UK to move fast to maintain its position as a crypto hub.
A part of the report reads:
“The UK should aim to be at least as broad in ambition as MiCA – but should also consider whether it can develop a bespoke regime that is more innovation-driven.”
“A bespoke regime for cryptoassets should adopt a functional and technology-neutral approach, in line with the principles of the current regulatory framework, as well as the concept of “same risk, same regulation”, while being tailored to the risks arising from cryptoasset-related activities. It should also be flexible enough to deal with future challenges – such as how Decentralised Finance (DeFi) should be regulated.”
Earlier this year, the Treasury had issued a consultation paper focused primarily on stablecoins to gather investments and its wholesale uses cases.
UK must make a move
The review also states that the UK must continue to participate in the Global Financial Innovation Network – a working group of national regulators –to lead the way on crypto policy and regulations. It continued to call for regulators to keep the initiatives of other international markets “under review” to avoid falling behind.
The highly anticipated review from Kalifa is expected to help the UK cement its position as a global hub for fintech and emerging technologies, and is comprised of five key workstreams namely; policy and regulation; skills; investment; international connectivity; and national connectivity.