UK to regulate crypto assets in post-Brexit financial overhaul
By Guillermo Ximenis
London, Feb 11 (EFE).- Despite the cryptocurrency crash recorded in 2022, the United Kingdom is ramping up plans to make the City of London a global crypto hub by taking advantage of the nation’s post-Brexit regulatory financial independence.
The so-called Edinburgh Reforms — the British government’s roadmap to taking advantage of Brexit freedoms to forge new financial services — provide a legal framework for activities linked to cryptocurrencies aimed at unlocking innovation and investments in the burgeoning sector.
The Treasury has also launched a consultation process to develop a “world-first regime” to regulate the crypto sector, aimed at protecting investors and preventing market abuses.
Economy minister Andrew Griffith has compared the crypto winter, which saw the swift decline of Bitcoin and other digital assets last year, to the dotcom bubble in the late 1990s.
“It is right to look to seek to embrace potentially disruptive technologies, particularly when we have such a strong fintech and financial sector”, Griffith told the Treasury committee of the House of Commons.
One of the key reforms will see the legalization of stable cryptocurrencies as a form of payment — private assets that are pegged to traditional currencies like the dollar, pound and euro.
The Bank of England is also mulling introducing a digital pound, which has already been dubbed Britcoin by the press and which would perform as a stable cryptocurrency backed by the public treasury, a move the European Central Bank (ECB) is also considering.
According to Conor Macmanus, Director in PwC’s Financial Services Regulatory Insights team, many of the details are yet to be honed in the UK, but the British and European regimes will differ in various areas.
The expert told Efe that the EU has created an independent framework for crypto assets, while the UK wants to go further and transform the financial services regulations.
Westminster plans include decentralized finance lending (DeFi) — platforms that provide loans to businesses, or the public with no intermediaries — something the EU is not including in its crypto plans and which Macmanus says will support the viability of the sector in the UK in the long term.
But the growth of the crypto sector is not only reliant on regulation, and attracting talent will be key to the City becoming a global crypto hub, the expert added.
Binance, one of the world’s leading crypto asset exchanges, has welcomed the proposals.
“We strongly believe that a stable regulatory environment can support innovation and is essential to establishing trust in the industry and long-term growth,” Kyrylo Khomiakov, Binance’s Head of Ukraine and Eastern Europe, said.
Coinbase, another global exchange platform that is listed on the New York Stock Exchange, has also championed the British government’s new plans.
“Nice to see the UK match political ambition with concrete regulatory proposals on crypto today. Lots to unpack over the coming days but great to see Andrew Griffiths delivering on the regulatory clarity needed for firms to innovate,” Faryar Shirzad chief policy officer at Coinbase said. EFE