The United Kingdom (UK), cannot afford to lag behind and has outlined plans to regulate Bitcoin and cryptocurrency. All this under the guise of consumer protection. The UK may be looking at the regulation on markets in crypto assets (MiCA), which will come into force in a few months. This is followed by a transition period of 18 months. So some haste is needed for the UK.
Regulation is a recurring theme. Governments consider it important that cryptocurrencies are placed in a legal framework. Consumer protection is often cited first, but clarification of the obligations of crypto companies is also an important topic. Especially after the collapse of several companies, this has come sharply on the radar of politicians and policymakers.
Regulation also improves the supervision of the crypto market, which some say is much needed as current financial rules fall short, according to them. In addition, regulation helps protect the integrity of the market. Although it has been doubted in the past that regulation does not give too much legitimacy to the crypto sector, in recent years you only hear this argument a little more.
The UK’s plan
The UK government has announced ambitious plans to tightly regulate the crypto sector. That should (hopefully) strengthen the economy of the Brexit-affected country. Consumer protection is a top priority.
We remain steadfast in our commitment to growing the economy and enabling technological change and innovation – and this includes the technology of cryptocurrency — Andrew Griffith-Economic Secretary of the Treasury
According to the government’s plans, the crypto sector will be regulated in a similar way to the traditional financial sector. An important component, as in MiCA, is power separation. This means that the client funds must be separate from the equity of a crypto company.
Other key elements of the plans include the trading activities of crypto exchanges, the custody and lending of bitcoin and cryptocurrencies, stablecoins, NFTS and ICOs, as well as adequate measures to prevent market abuse in the future.
UK as a global hub?
Last year, the UK already announced that it wants to become a global cryptocurrency hub. The plans with which it comes now seem to confirm this intention. Whether this will succeed, however, is the question. The consultation will end on april 30, 2023. Until then, citizens and businesses can express their views on the UK’s plans. So it remains to be seen whether London will once again become the financial heart of Europe.