Two years ago, Britain made a final effort with proposals for an NFT project, but it ended sadly. Now, a major obstacle looms once more.
The British government has declared its intention to make another attempt at turning the U.K. into a leading destination for cryptocurrency on a global scale.
At the Innovate Finance conference in London’s financial district, Minister Bim Afolami shared the government’s intention to establish a regulatory framework that encourages companies to experiment while ensuring consumer safety.
The Economic Secretary to the Treasury announced proposals for a bill concerning crypto assets like stablecoins and staking. The aim is to complete the legislative process by summer’s end.
When it becomes active, various cryptoasset transactions such as running an exchange, safeguarding users’ funds, and more, will fall under regulatory oversight for the very first time.
Bim Afolami MP
The Conservative government’s previous efforts regarding cryptocurrency haven’t consistently gone as intended. About two years ago, there were plans to introduce an official non-fungible token in collaboration with the Royal Mint – responsible for producing the country’s physical currency. However, this project was unexpectedly dropped the following year, with opposition politicians emphasizing the importance of addressing the cost-of-living crisis and persistent inflation instead.
After making some strides, the U.K. is working on providing crypto businesses with more definitive guidelines (as of June 2023). The government announced that a newly passed Financial Services and Markets Bill would serve as a catalyst for the economy, enabling digital assets to be regulated for secure adoption by consumers in Britain.
Approximately 9% of British adults, which translates to around five million people, had cryptocurrencies in their possession by August 2022, according to data from the Financial Conduct Authority. This number is likely to have increased since then due to the cryptocurrency markets regaining momentum. Aside from this reason, the Conservatives and Prime Minister Rishi Sunak are also looking to attract investment as part of their post-Brexit strategy.
Some major cryptocurrency companies, including Coinbase, are growing frustrated with the continuous uncertainty in the U.S. due to the SEC’s enforcement-focused regulatory approach, which they criticize as “regulation by enforcement.” A more welcoming environment in other countries might entice businesses to relocate.
Bivu Das, the U.K. managing director of Kraken, shared with crypto.news his belief that carefully crafted laws could provide clarification for cryptocurrency exchanges.
“The U.K. presents an alluring option for crypto businesses looking to invest, boasting a pro-crypto administration, a vast pool of talent versed in fintech, and a rich background in financial services and capital markets. The recent crypto legislation is simply another achievement on the road to establishing the U.K. as a leading global hub for cryptocurrencies.”
Bivu Das
According to Das, advocating for innovation whilst ensuring consumer protection against risks is essential. He remains hopeful, expressing optimism despite the difficulty of regulating the trade of decentralized assets.
Decentralized finance holds genuine promise, and it could fundamentally change the way people access financial services. It’s understandable that the U.K. government is prioritizing regulation of centralized entities to begin with and creating a framework for businesses to operate within. We are eager to collaborate with all concerned parties as this regulatory landscape develops further.
Bivu Das
Although Afolami expressed optimism during his interactions with fintech industry heads, it’s important to note that the government’s proposed crypto legislation is not guaranteed to be enacted.
In the United Kingdom, a general election must be held no later than January 2025. With numerous controversies and scandals surfacing, as well as two prime ministers who weren’t elected through the democratic process, the Conservative Party is currently trailing in public opinion polls.
Sunak remains silent on the timing of a potential vote and seems to be waiting for economic conditions to get better, with the expectation that the cost-of-living crisis may eventually ease up.
The Labour Party is expected to handily win the upcoming election, marking their return to power after a 14-year absence. However, they may not be as eager to implement crypto-friendly legislation upon taking office.
In the 28-page Labour Party document detailing their financial services plan, published in January, there was no reference to cryptocurrencies whatsoever. Nevertheless, they announced their intentions to establish the U.K. as a leading nation for tokenization technology and advance the creation of a central bank digital currency.
Currently, progress on creating a digital version of the British pound, colloquially referred to as “Britcoin,” is advancing slowly. The Bank of England is still debating whether to issue a Central Bank Digital Currency (CBDC), with privacy concerns being the primary focus of responses to their recent consultation.
If the prime minister’s position is weakened and a new leader seems imminent for 10 Downing Street, it’s uncertain if the government’s plans to establish a “crypto hub” will come to fruition within the next few months.
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2024-04-17 12:55