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The U.K.’s new crypto rules are part of a program of regulatory divergence from the European Union, the supranational bloc of which it was until recently a member – but some crypto advocates are underwhelmed by the extent to which the country is really using post-Brexit freedoms to carve out a unique niche for itself.
A policy paper published Wednesday lays out how the Treasury wants to use powers set out in the Financial Services and Markets Bill – a law which, from the start, the government billed as a chance to finally set independent financial rules.
A guidance document released on Wednesday explains how the CRF wants to use the authorities outlined in the Financial Services and Markets Bill – an act that, at the very beginning, the government has said that there is an opportunity to finally establish independent financial rules.The Government will move at pace to implement a more agile and more internationally competitive set of rules that will harness the potential of U.K. financial services to stimulate growth,” the government’s then-Economic Secretary Richard Fuller said in his opening speech on the bill in September, referring to other provisions of the law that The EU is preparing to vote shortly to officially adopt its regulation on crypto asset markets (MiCA), The politicians in the United Kingdom know full well that they have to act quickly in the face of world competition.roll back or reform all European Union legislation for financial services that remains on our statute book.”
With the EU set to vote imminently to formally pass its Markets in Crypto Assets regulations (MiCA) into law, U.K. politicians are keenly aware they must move fast amid global competition.
“The EU has just agreed to a comprehensive regime for regulating crypto exchanges and crypto assets more broadly, and [U.S. President] The EU has just adopted a global regulatory regime for crypto trade and assets, and [President of the United States] Joe Biden said he is considering doing something similar," said opposition treasury critic Tulip Siddiq during a committee meeting on bills in October.”
Now, the broad thrust of the U.K.’s approach – influenced by then-Finance Minister and now Prime Minister Rishi Sunak’s 2022 vow to make the U.K. a crypto hub – has been made clear, but experts point out how similar the proposals are to the EU’s framework.
'It seems to follow, at a minimum in terms of reach and approach, what the rules do about mica," diego ballon ossio, Principal at Clifford Chance, a British law firm, told coindesk. It seems to be coming, at a minimum in terms of reach and approach, what MiCA does," Diego Balloon Ossio, Senior partner at Clifford Chance, a British law firm, told CoinDesk.
The United Kingdom is positioning itself with a system as comprehensive as the one in Europe."
'These proposals are not an entirely new regime as the European Commission has approached the mica, instead [the British Treasury] plans to work with what we already have and expand our current framework to that asset class," Weatherill said, Financial services partner with norton pink fulbright, in a press release sent via email.
For Mark Aruliah, senior policy adviser at Elliptic, the U.K. may be a step ahead of the EU – in particular because the bloc chose to ban interest payments on stablecoins, which are crypto pegged to the value of other assets like fiat currencies. He believes that by setting high standards for stable issuers, the EU could deter decentralised funding, which uses these assets for payments.
"British law – and of course we didn't see the details – may not solve this problem. It might just be silent on it,” he said, in which case U.K. players will get better liquidity spreads and lower cost. It may be nothing," he said. In this case, the U.K. players will have better cash margins and lower costs.
Historically, lending rates on U.S. dollar-pegged stablecoins were 9% to 13% – and even if those have calmed during the crypto winter, central banks across the world have been raising the interest rates for cash, making zero-reward stablecoins relatively less attractive.
The United Kingdom plans to put in place multiple regimes for the cryptography industry, including a regime for knives. In its January 2021 consultation on stablecoins, it said the crypto should be subject to existing payments legislation, with the Bank of England regulating major stablecoins that could have an impact on the whole financial sector.
Read more: UK Crypto Industry welcomes the new regulations of stablecoin, waits for advice. That’s perhaps because some high-profile lenders such as Celsius NetworkVoyager Digital failed in the period since MiCA was first proposed.
Include the crypto loan, Dea Markova, Chief Executive Officer of Forefront Advisers told CoinDesk.
This may be due to some high-level lenders like Celsius NetworkVoyager Digital having failed in the period since MiCA was first offered. The United Kingdom is also embarking on fields that the European Union has left ambiguous as the thorny question of whether stock exchanges should issue a white paper of investor disclosures for widely traded assets such as Bitcoin (BTC), Markova said.
In other areas such as the treatment of non-fungible tokens, there could also be more divergence, she said – though it’s unclear how because in both cases the detail has been left to rule-making by regulators at the Financial Conduct Authority and European Securities and Markets Authority.
"they will be subject to the conditions for admission and disclosure." in other areas such as non fungible token processing, there may be more divergence as well, She said – although it is difficult to know how, in both cases, the details were left to the rule-making bodies of the Autorite de la deontologie financiere and the Autorite europeenne des valeurs mobilieres et des marches. In other sectors like non fungible token processing, there may be more divergence as well, She said – although it is difficult to know how, in both cases, the details were left to rule-making by the regulatory bodies of the AMF and the AMF.
One of the key elements of the Brexit debate in the UK has been to determine if they will be able to chart their own course, in effect, keep taking dictation from your next-door neighbour. For the ossio balloon, the jury is always out." If we make rules or set rules, I don't know," he said.”
