Crypto Industry in UK Pushes for Regulation as MiCA Clears the Way
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The European Union (EU) has made a significant move in the regulation of the crypto sector by finalizing its Markets in Crypto Assets (MiCA) legislation.
MiCA Legislation Puts Pressure on U.K. and U.S. to Clarify Crypto Rules
The MiCA package will establish the criteria for authorization that crypto service providers and token issuers must comply with, and the member states will enforce it.
This legislation differs from the U.K.’s staged approach to regulating crypto, which involves different regulators setting out their own requirements.
The implementation of the new regulation by all 27 nations of the EU is expected to exert pressure on other jurisdictions, including the U.K., to accelerate the implementation of their crypto rules, according to industry groups.
While the MiCA legislation is not flawless, London-based lobby group CryptoUK says it is an extremely relevant regulatory stack that puts significant pressure on the U.K. and the U.S. in terms of delivering operational clarity for crypto.
The U.K.’s economic strategy after Brexit, as outlined in the Financial Services and Markets Bill currently being reviewed by Parliament, Features measures to regulate crypto as financial instruments and stablecoins as payments.
Despite this, the U.K. lags behind the EU in the establishment of regulations for the crypto sector, and industry lobbying groups warn that this could significantly impact U.K. policymakers.
The U.K.’s proposal for crypto regulations, as outlined in the consultation paper, suggests an authorization framework similar to that of MiCA. However, the U.K.’s approach differs from MiCA as it attempts to regulate asset-backed stablecoins as payments.
The U.K.’s crypto proposals fall short in some areas, such as settlement and financial advice. While the EU has already wrapped up its approach and provided transparency, the U.K. is still in a phase of “uncertainty” since the rules have yet to be established, as stated by Rhiannon Butterfield, who works as a policy advisor on payments and innovation at London-based lobby group U.K. Finance.
UK’s Staged Crypto Regulation Allows Adaptability Despite MiCA Pressure
The EU has become a leader in regulating the crypto sector through MiCA, while the U.K. has opted for a gradual approach, building on existing financial regulation. This strategy enables the U.K. to adapt more easily to the rapidly changing crypto sector.
Gwyneth Nurse, director general of financial services at the Treasury, said at the Innovate Finance conference that the U.K.’s approach to regulating crypto is interesting and that the U.K. has factored in aspects of MiCA in its consultation paper.
Rhiannon Butterfield of U.K. Finance states that the U.K.’s staged approach to regulation is appreciated by numerous crypto companies as it capitalizes on existing financial regulation. This approach enables the U.K. to adjust to developments in the crypto industry more effectively.
According to Riccardo Tordera Ricchi, who heads policy and government relations at the Payments Association in London, the U.K. plans to introduce the necessary regulations at the appropriate time. It’s possible that the EU may also need to create a new legislative package called “MiCA 2.0.”
The EU’s MiCA legislation has pushed the U.K. to accelerate its crypto regulations, but the U.K.’s phased approach enables flexibility in a fast-changing sector. Although the U.K. lags behind the EU in crypto regulation, it has drawn inspiration from the MiCA legislation and incorporated some aspects into its consultation paper.
As the crypto industry evolves, both regions will likely continue to adapt their regulations accordingly.
Coinbase CEO Brian Armstrong Considers UK Move Amidst US Crypto Crackdown
The CEO of Coinbase, Brian Armstrong, has stated that relocating the company’s headquarters to the United Kingdom is a possibility if the regulatory landscape in the United States does not improve.
This announcement comes as U.S. regulators have been increasingly taking enforcement actions against cryptocurrency companies, leading some to believe that the authorities are conducting a covert war on crypto.
Nic Carter, a partner at Castle Island Ventures, was the first to speak publicly about what he called “a well-coordinated effort to marginalize the industry.”
He compared this to Operation Chokepoint, a program that began in 2013, which aimed to “choke specific undesirable industries” by bypassing laws and democratic due process. Carter and others believe that Operation Choke Point was resurrected this year to stifle the cryptocurrency industry.
Coinbase is one of the companies that has received a Wells Notice from the SEC, informing them of pending enforcement action. In response, Armstrong has said that the company may consider relocating elsewhere due to the challenging regulatory environment in the United States.
Speaking at FinTech Week in London, Armstrong emphasized that “anything is on the table” and that the UK is Coinbase’s second-largest revenue market after the US. However, he also stated that an imminent departure from the US is unlikely, as the company would only consider such a move if regulatory clarity does not happen in “a number of years.”
Armstrong has also taken the opportunity to meet with UK lawmakers to advise them on the development of a crypto hub in the country.
The UK has declared its intentions to become a leader in the crypto space, and Armstrong’s visit highlights the importance of regulatory clarity in attracting cryptocurrency businesses to the country.
The possibility of Coinbase relocating its headquarters to the UK is a clear indication of the challenging regulatory environment in the United States. It also highlights the importance of regulatory clarity in attracting crypto companies to a country, as seen by the UK’s efforts to become a crypto hub.
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