The UK can’t afford to send mixed messages about crypto

The UK is paving the way for cryptocurrency services, seeking out both startups and established players, and leading the way in pioneering regulation for stablecoins and non-replaceable tokens.

But a lot has changed. After two years of consultation, European Union lawmakers have reached an agreement on the regulation of Markets in Crypto-Assets (MiCA), marking a crucial moment for harmonized oversight of the sector on such a scale. This followed US President Joe Biden’s executive order recommending a government-wide approach to responsible development of digital assets in the United States.

The UK has also undergone major political shifts during this period, including the resignation of Chancellor of the Exchequer John Glen, whose April speech in support of the industry was the most eloquent representation by a British official to date.

While Glen was broadly in favor of a regulated and nurturing framework for the industry, other UK institutions have expressed concerns about the security and viability of cryptocurrency. In fact, on the same day as Glen’s speech, Bank of England Governor Andrew Bailey said, called the crypto market an “opportunity for the outright criminal.”

It is precisely this kind of mixed message that could hinder the development of the industry just as the starting gun is fired. Uncertainty leads to stagnation. Evidence suggests that a lack of regulatory clarity has already held back widespread consumer adoption of cryptocurrency.

The industry will not be able to enjoy any comfort until regulators align their thinking.

With a new prime minister and government on the horizon, it is vital that anyone settling down at 11 Downing Street unites the government’s position with the Bank of England and the country’s regulators so that the UK can become a true leader be in the field of innovative technology and standards setting.

The crypto sector has reached a point where it is both gaining global recognition as an incubator for rapidly evolving financial technology when it falls short due to inconsistent approaches.

Facing a crunch point in the race for global crypto leadership

The crypto market is worth about $1 trillion. That figure will increase as consumer and business adoption grows, creates jobs, improves financial inclusion and provides new alternatives to legacy financial services systems.

The UK is one of Europe’s leading fintech hubs and is in a fortunate position, equipped with the infrastructure, investments and talent to defend the crypto industry. But to solidify this position, it must continue to attract the best-of-breed challenging financial services companies. To achieve this, it must take a decisive and one-sided stance on cryptocurrency – in line with the points provided by Glen – showing that it the home for building and growing innovative digital asset companies. After all, effective financial regulation exists to protect consumers without suppressing the innovation that ultimately benefits them.

This is not to say that Bailey’s concerns about the possibility of crypto being used for illegal activities are unfounded. But addressing this point should not prevent the UK government from demonstrating that it is not afraid of new technology and the positive changes that crypto specifically can deliver.

To that end, Glen’s statements regarding the delivery of a financial market infrastructure sandbox and the creation of a crypto-assets Engagement Group are welcome steps that we believe will enable the UK to continue to serve as a leader in this space. in active collaboration with industry.

The value of a unified approach to crypto regulation

It is also important to take one unified approach to crypto regulation. With MiCA, the EU is raising the bar and to be applauded for demonstrating the benefits of a unified approach to crypto regulation.

As the UK considers additional regulation in this area and the newly introduced Financial Services and Markets Bill makes its way through Parliament, it would be good for the UK to build on the EU’s approach with MiCA, working with both the industry as well as the consumer to discourage uncertainty and doubt.

Likewise, the upcoming consultation on the government’s approach to crypto assets provides a good opportunity for policymakers to hear from the industry how best to build the regulation that will protect businesses and consumers while enabling innovation to thrive.

Building regulations are, of course, only part of the puzzle. Communicating government policies to those subject to regulation is just as important as policymakers who understand the industry they regulate. To this end, a robust public-private partnership is essential to adapt financial regulation to new technologies.

Only through a unified approach to crypto regulation will companies feel confident that they operate in a market where authorities are fully invested in the success of the industry, and consumers can feel protected by effective regulatory oversight.

To ease the current period of economic uncertainty, the UK will need to rely more on its flagship industries, such as fintech, to boost growth, create jobs and help the country ‘Build Back Better’. To achieve this, it must encourage innovation in digital assets, supported by a resilient and comprehensive regulatory framework. At this early stage, when a number of countries are trying to grab the crypto crown, the UK cannot afford to let mixed messages hinder its crypto ambitions.

The views expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. This article is for general information purposes only and is not intended and should not be construed as legal or investment advice.

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