When it comes to popularity, the UK crypto market is one of the vibrant in all the world. The home of a growing number of blockchain and crypto based start ups, the UK is around 9th place in countries with highest Bitcoin and Cryptocurrency popularity and acceptance. However, what has turned into a thriving market could be under threat following a recently proposed plan put forward by British MPs to regulate the crypto sphere has attracted criticism from a number of experts.
On Monday, The UK government’s “Cryptoasset Taskforce” published a report which showed that the technology that powers cryptocurrencies can be utilized by the financial services sector, amongst other industries. On the same day, a joint report by British Business Federation Authority (BBFA), TodaQ cryptocurrency exchange, and the venture capital fund Novum Insights urged caution, saying that “bad regulation is worse than no regulation at all”.
Patrick Curry, the chief executive of the BBFA said:
“It is a very blunt instrument approach and I haven’t seen this in other countries. The use of this technology is still a voyage of discovery and these technologies are being refined for different types of use. My concern is the law of unintended consequences.”
One of the biggest complaints about the proposed regulation is that it is too Bitcoin centric. However, the greatest concern voiced by the crypto community and other experts, is that the proposed legislation may well push crypto exchanges in the UK out of the country. This sort of move could put into jeopardy the United Kingdoms position at the forefront of fintech innovations and a leader in the financial services world
Neil Foster, the corporate technology partner at Baker Botts, said:
“With sophisticated classification we should work out what could be a regulated activity. If you crowbar everything into the Regulated Activities Order you are making everything into an investment bank.”
Can Britain Afford to End the Laissez-faire Approach to Crypto?
Until now, the UK has reaped the benefits of adopting a laissez-faire approach to the crypto world. However, the rise in popularity of ICOs brought about about a rise in the number of scam ICOs which meant more focus and resources from regulators such as the SEC. With Brexit fast approaching and the threat of big financial institutions moving away from London and into Europe (Frankfurt and Paris have been aggressively courting the big banks), Britain is in a precarious position with regards to its future at the centre of the financial world.
Regulation is needed to end what the UK treasury committee called only last month the ‘Wild West industry’. However, regulation that is too heavy or stifling, coupled with the Brexit effect could have disastrous results for the UK economy.
The general consensus amongst analysts, experts and UK investors, is to implement the necessary regulation to safeguard against money laundering and to ensure adherence to international compliance, but don’t over-regulate to the point where the crypto industry could move out of the UK altogether.
