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Enforcement and adoption: What do UKs recent regulatory aims for crypto mean?

In April, the UK’s Chancellor of the Exchequer, also known as Her Majesty’s Treasury, announced its intention to put the UK at the forefront of technology by bringing stablecoins into the country’s payment regulation , a bold move that seems especially intriguing in contrast to the recent shock, caused by the decoupling of terrausd (ust).

later in may, during the queen’s annual address, prince charles briefed parliament on two bills that will support “the safe adoption of cryptocurrencies” and “create powers to seize and recover crypto assets more quick and easy”.

Reading: Bitcoin declared uk regulator

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Taken together, these initiatives give an impression of the nation’s growing interest in digital assets, which is hardly surprising, given the inevitable competition for innovation with the European Union.

The last few months have been busy with cryptocurrencies in Britain. In addition to some important precedents being set, such as the High Court decision to recognize Non-Fungible Tokens (NFTs) as property or the listing of the first European Greyscale ETF on the London Stock Exchange, we witnessed some announcements. important to regulators.

the treasury issue with stablecoins

In its announcement on April 4, following a multi-month public consultation, the treasury acknowledged that certain stablecoins could become “a pervasive means of payment” for retail customers. he also declared his readiness to “take the necessary legislative steps” to bring stablecoins into an understandable regulatory framework.

as koinly tax chief tony dhanjal explained to cointelegraph, this announcement should be considered big news or even a game changer because it will lead to the reclassification of stablecoins in the uk:

Treasury’s expressed intentions weren’t just limited to stablecoins; The financial regulator has also teased the launch of a crypto asset engagement group, which will consult with industry stakeholders; reassessing the country’s tax system regarding cryptocurrencies, establishing a “financial market infrastructure sandbox” and even the actual mint’s own nft.

Even the infamous market crash in the second week of May, particularly painful for the original promise of zero volatility for stablecoins, did not deter the treasury. According to the independent, legislation to make stablecoins a means of payment would be included in the Financial Markets and Services Bill.

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what is known now is that the treasury does not plan to include algorithmic stablecoins, like you, in this legislation; only fully backed stablecoins like tether (usdt) or usd coin (usdc) are being considered.

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seize and recover

The aforementioned Financial Markets and Services Bill, which would possibly include guidelines for stablecoins, was produced as part of the Queen’s Speech, a package of 38 pieces of legislation that was announced to parliament on May 10 .

In its current form, it doesn’t say much, though the language itself sounds pretty benevolent to the industry. the bill aims to “seize the opportunities of innovative technologies in financial services”, including:

for now, the key point of the announcement of the bill is the intention to elaborate a national framework that does not copy the one of the eu. Although it would initially apply to the traditional financial sector, similar requirements are expected for crypto assets.

Enforcement and adoption: What do UK’s recent regulatory aims for crypto mean?

The Eastern end of Government Offices Great George St, where Her Majesty’s Treasury is located. Source: Carlos Delgado

Another part of the Queen’s Speech that bodes significant for the crypto industry is the Economic Crime and Corporate Transparency Bill. At first sight, it doesn’t sound that amicable to the digital currencies, referring to them in a list of the risk zones where British enforcers are going to tighten their grip. As the only line mentioning crypto goes, the bill would create powers to:

While the “primary medium for ransomware” is not exactly benevolent wording, the existence of a body that could not only seize but also recover funds in crypto would boost the market.

“a big step for the UK”

general perception in the UK. the crypto community is positive, djahal said. There is still a common belief that cryptocurrencies are a haven for criminals, so regulation is welcome, he believes:

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Benjamin Whitby, Qredo’s head of regulatory affairs, tends to agree on that point. he told cointelegraph:

“I feel the recognition of the space in this proposal is very positive, recognizing the asset class will unlock the opportunity for more fintech companies to start working with crypto assets in their technology stack.”

While the ambition to develop an effective application may still be perceived as somewhat ambivalent at this point, experts are excited about the announced recognition of the stablecoin. Whitby called it “a big step for the UK” but said we shouldn’t kid ourselves that “everything will go smoothly.”

dhanjal believes that the British financial authorities could even pursue their own stablecoin, which would look a lot like a central bank digital currency (cbdc), a government-backed “britcoin” that will be pegged to the great pound sterling. the intent here is to maintain financial stability and address the volatility inherent in cryptocurrencies, he states:

make britain great again?

It’s hard not to compare the UK. with its continental neighbor now that they are separated and have to compete with each other for talent and innovation. the very spirit of the queen’s speech builds on that comparison, declaring her mission to “make the most of our Brexit freedoms” or “reap the benefits of Brexit”; Overall, the word “Brexit” is mentioned 20 times. the United Kingdom. Whitby believes that she could and could innovate and adopt faster than many jurisdictions, and moving away from the eu regulatory process allows her to act faster:

dhanjal is confident the uk has a high chance of outperforming its continental neighbours, having a centuries-old heritage in financial services, a large pool of talent and experience from around the world in finance and start-ups . In his opinion, the UK is not ready to adopt the general spirit of the EU regulations, and this is good news for the country.

“now that the shackles of the eu have been removed through brexit, the united kingdom. can speed through the gears to become a world leader in crypto innovation and adoption,” he said.

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Gilbert Hill, the chief strategy officer of the blockchain-based data aggregation platform group, told Cointelegraph that the UK. the authorities are genuine in their efforts to create a haven for starting and scaling crypto companies, but, in his opinion, not all of them are efficient.

in particular, he finds the current regulatory sandbox inflexible and said it has rejected two-thirds of applicants, which has already resulted in some of the best projects fleeing to the European continent. Hill also emphasized the strengths of the European approach:

to become a future leader, said hill, the united kingdom. it needs the same degree of political will “shown on the continent” and breaking free from the inflexible fca/sandbox model. Let’s hope that the spirit of competition and the desire to justify its separation from the continent will help the nation to make the right decisions.

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