January 30, 2023

The UK is paving the way for crypto services, flirting with start-ups and established players alike while leading the way in pioneering regulation on stablecoins and immutable tokens.

But a lot has changed. After two years of deliberation, EU lawmakers have reached an agreement on regulating markets in crypto-assets (MiCA), marking a pivotal moment for coordinated sector oversight at this scale. This came on the heels of US President Joe Biden’s executive order recommending a full-fledged government approach to the responsible development of digital assets within the United States.

The UK has also seen major policy shifts during this period, including the resignation of Chancellor of the Exchequer John Glenn, whose April address represents the industry’s most assured support to date from a British official.

While Glenn has been widely supportive of a regulatory framework and sponsorship for the sector, other British institutions have expressed concerns about the safety and viability of cryptocurrencies. In fact, on the same day Glenn’s speech, Bank of England Governor Andrew Bailey Call The cryptocurrency market is an “opportunity for the outright criminal.”

It is precisely this type of mixed message that can hamper the development of the industry just as a starting pistol is being fired. Uncertainty breeds stagnation. Evidence suggests that the lack of regulatory clarity has already put the brakes on the widespread adoption of cryptocurrencies by consumers.

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

With a new prime minister and government on the horizon, it is critical that everyone residing in 11 Downing Street unite the government’s position with the Bank of England and the country’s regulators so that the UK becomes a true leader in innovative technology and standards tuning.

The cryptocurrency sector has reached a point where it has achieved global recognition as a fast-moving fintech incubator and lost ground due to inconsistent methods.

Facing a crisis point in the race to lead the global digital currencies

The crypto market is worth about $1 trillion. This number will increase with growth in consumer and business adoption, job creation, improved financial inclusion, and provision of new alternatives to legacy systems in the financial services sector.

The UK is one of the leading Fintech hubs in Europe and finds itself in a fortunate position, equipped with the infrastructure, investments and talent to support the cryptocurrency industry. But in order to solidify this position, it must continue to attract the best competing financial services brands. To achieve this, you must take a decisive and one-sided stance on cryptocurrency – consistent with the points made by Glen – and this shows that it is The Home to building and growing innovative digital asset companies. After all, effective financial regulations exist to protect consumers without stifling innovation that ultimately benefits them.

This does not mean that Bailey’s concerns about the potential for cryptocurrency to be used for illicit activities are unwarranted. But addressing this point should not prevent the UK government from proving that it is not afraid of new technology and that the positive changes that cryptocurrencies specifically can bring.

To this end, Glenn’s comments regarding the delivery of sandbox for financial market infrastructure and the creation of a crypto-asset sharing pool are welcome steps that we believe will allow the UK to continue to act as a leader in this field by actively collaborating with the industry.

The value of having a unified approach to regulating cryptography

It is also important to take a single, unified approach to regulating cryptography. With MiCA, the European Union sets standards and should be commended for demonstrating the benefits of a standardized approach to regulating crypto.

As the UK considers additional regulation in this area and the newly introduced Financial Services and Markets Bill makes its way through Parliament, it will be the UK’s duty to build on the EU’s approach with MiCA, working with industry and consumers alike to discourage uncertainty.

Likewise, the upcoming consultation on the government’s approach to crypto assets is a good opportunity for policy makers to listen to the industry about how best to build regulations that will protect businesses and consumers while enabling innovation to thrive.

Of course, building organization is only one piece of the puzzle. Communicating government policy to those who are regulated is just as important as policy makers’ understanding of the industry they regulate. To this end, strong collaboration between the public and private sectors is vital for adapting financial regulations to new technologies.

Only with a unified approach to regulating cryptocurrencies will companies have the confidence that they are operating in a market where the authorities are fully invested in the sector’s success, and consumers can feel protected through effective regulatory oversight.

To mitigate the current period of economic uncertainty, the UK will need to rely more on its key industries, such as financial technology, to drive growth, create jobs and help the country “build back better.” To achieve this, you need to encourage innovation in digital assets backed by a flexible and comprehensive regulatory framework. At this early stage, as a number of countries seek to seize the cryptocurrency crown, the UK cannot allow mixed messaging to stymie its crypto ambitions.

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

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