Crypto industry urges UK government to think globally as consultation on proposed rules ends

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UK crypto players have largely welcomed the nations proposed legislation for the industry, but they want the country to work with regulators around the world to avoid post-Brexit isolation, especially following the settlement. of the European Union on Crypto Asset Markets (MiCA), a review of public comments found.

The UK has been consulting the public on its proposed strategy for the crypto sector since February, and the consultation period ended on April 30 with global industry titans submitting their views.

This is a welcome step towards establishing regulatory clarity for crypto assets in the UK. Applied thoughtfully, these frameworks will accelerate the adoption of socially beneficial innovations, while reducing criminal and financial risk, said Riccardo Tordera Ricchi, policy manager at UK-based The Payments. Association, in a statement to CoinDesk.

Instead of creating a whole new set of rules for the crypto space like MiCA, the UK wants to bring crypto into the scope of its existing regulatory frameworks, and the government could issue crypto-specific rules in the next 12 months.

If you compare it to MiCA, where the first analysis you’ll do is look at the assets, and the asset will tell you if you fall within the regulatory perimeter or not here, it’s a bit different. It’s based on financial activity, which I have to say from a regulatory perspective is a difficult thing to get into, said Meiran Shtibel, associate general counsel at US-based Fireblocks.

Lobby group CryptoUK supports the same government risk, same regulatory outcome approach, Su Carpenter, the group’s chief operating officer, said in a press release.

It resolves the desired outcome rather than applying generic rules capturing the intricacies of new innovations and their unique benefits/risks, Binance CEO Changpeng Zhao recently tweeted.

When building a market abuse regime, the UK needs to ensure that what it defines is compatible with other jurisdictions that host global crypto companies and can work with standard setters such as the International Organization of Securities Commissions, the Group of Seven (G7) and the Group of 20 (G20), said Nick Taylor, head of policy for Europe, the Middle East and Africa at the stock exchange. British Luno. Luno, like CoinDesk, is owned by Digital Currency Group.

CryptoUK is also calling on the country to align with global regulators regarding disclosure requirements for crypto companies.

It would make sense for the regulatory regime to harmonize [with global regulators]to the extent possible, to allow cross-jurisdictional operation to be as transparent as possible, Tordera said.

In its response to the government’s proposals, AFME also warned that the UK’s planned crypto licensing regime could damage its reputation as an open market by making it difficult for foreign firms to enter. The government suggested in its consultation that the scheme would require companies that serve UK customers, regardless of where they are established, to register with the Financial Conduct Authority to continue doing business in the country.

AFME does not recommend this approach and says it strays too far from the way the UK usually regulates financial institutions. CryptoUK has called for overseas companies to be exempted from local licensing and the government to stick to regulating UK-based companies

The licensing regime should come with a transition period allowing crypto firms to continue operating during the licensing process, AFME and Taylor suggested. CryptoUK has recommended a faster process for companies already registered with the FCA, which France is considering as it prepares to implement MiCA.

It is essential that regulators urgently adopt a speedy and proportionate authorization process for complete and accurate requests, and strive to avoid duplicate requests for information from companies, taking into account the history of oversight of companies during the authorization process, Binance said in its response to the proposal. .

AFME, CryptoUK and Binance have also asked for clarification on the scope of economic activities that fall under the existing rules, as well as the treatment of assets like non-fungible tokens (NFTs). All three parties suggested that algorithmic stablecoins should fall under UK rules, which has been on regulators’ radar since the collapse of the Terra ecosystem in May 2022.

The UK’s Conservative government, under Prime Minister Rishi Sunak, has said it wants to position the country as a crypto hub and could push to finalize the relevant rules ahead of the general election, which is planned for 2025 but could take place earlier. .

CryptoUK expects the proposed stablecoin legislation and rules for the wider crypto space, what the government calls the first two phases of its proposals, to be implemented by the end of 2024. .

We suggest taking a broader view of all enablers for the UK to achieve its ambition of becoming a global hub for the crypto industry, which includes a proportionate application of FinProm [Financial Promotion] rules to trading platforms, addressing concerns of debanking by the crypto industry and a progressive tax policy that takes into account the nuances of the asset class, Carpenter said in a statement.

MP Lisa Cameron told CoinDesk that she had positive discussions with lawmakers about expanding the UK crypto tax framework.

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