- The UK government has unveiled a new regulatory program for crypto following Brexit.
- The public consultation period for crypto regulation in Britain ends on April 30.
- Caution has been urged within the crypto industry due to potential timeline uncertainties.
The UK government is poised to leverage Brexit to establish a distinct regulatory framework for the crypto industry, which could be enshrined in law within the next 12 months, as revealed by Andrew Griffith, the Economic Secretary to the Treasury.
“We’ve regained control of our rulebook, a feat the UK has not achieved in decades,” Griffith expounded in an exclusive interview with CNBC, alluding to Britain’s separation from the European Union.
"This newfound autonomy empowers us to respond with agility and proportionality. I'm particularly eager to maximize this opportunity."
Brexit Opens Doors for a New Regulatory Framework
The deadline for the public consultation period on Britain’s proposed crypto regulation is slated for April 30 of this year.
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The objective is to create a “secure legal environment for cryptoasset activity, fostering innovation and providing regulatory clarity for firms” emphasizing “exchange activities, custody activities, and lending activities.”
In contrast, the European Union (EU) is charting a divergent course in crypto regulation. Its comprehensive proposals for regulating Markets in Crypto-Assets (MiCA) are currently more intricate, focusing on stablecoins, central bank digital currencies (CBDCs), threats to financial stability, and consumer protection.
Griffith outlined that the UK’s approach to crypto regulation would run parallel to the existing framework for traditional finance. “Whenever possible, we aim for consistent regulation of the same assets and transactions.
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However, we acknowledge that the crypto asset and distributed ledger space presents unique opportunities, and we intend to capitalize on them,” Griffith elaborated in the interview with CNBC.
UK as a Global Hub for Cryptoasset Technology
Prime Minister Rishi Sunak had previously articulated his vision of making “the UK a global hub for cryptoasset technology.”
Nonetheless, the crypto industry should exercise caution in getting overly enthused about the prospect of a comprehensive regulatory framework for crypto in the UK within the next year.
The government initiated a review of crypto promotion and marketing laws back in 2020. The proposed legislation was only published in March of this year after a three-year gestation period. The actual enactment of the law is still pending.
On the Flipside
- The EU’s more detailed proposals for crypto regulation through MiCA could result in divergent standards between the UK and EU, potentially impacting cross-border crypto activities.
- Considering the lengthy delays in publishing proposed legislation after a review initiated in 2020, the UK government’s ambitious timeline for implementing a new regulatory framework for crypto within a year doesn’t seem feasible.
- The lack of detailed information on the provisions and implications of Britain’s proposed crypto regulation, particularly in exchange, custody, and lending activities, could create uncertainty and hinder innovation in the crypto industry.
Why You Should Care
The UK government’s pursuit of a distinct regulatory framework for cryptoassets to create a safe jurisdiction for crypto activity and foster innovation could have significant implications for exchange, custody, and lending activities.
As the UK takes a different approach from the EU in regulating the crypto industry, it presents unique opportunities for the crypto community.
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