UK Advised to Adopt Unique Crypto Regulations to Benefit from US Web3 Firms Exodus
Summary:
As per a report from conservative think tank Policy Exchange, the UK has the potential to benefit from the exodus of Web3 firms from the US as they leave due to regulatory issues. The report suggests the UK to implement its own cryptocurrency regulations, including moderating current KYC norms, limiting liabilities for individuals holding DAO tokens, and allowing private stablecoin issuers to store reserves in the Bank of England. The report also warns against undermining self-hosted wallets or classifying proof-of-stake services as financial services. The recommendations come amidst the UK regulators taking a tougher approach towards the digital asset industry.
The departure of Web3 companies from the United States due to unclear regulations offers a prime opportunity for the United Kingdom to step in and capitalize, says a recent report from a think tank. To do so, it would entail the U.K. crafting its own bespoke set of rules around cryptocurrency, given that the U.S.' regulatory climate isn't supportive.
On October 2nd, Policy Exchange, a leading think tank, released a report that included ten recommendation for the U.K.'s government to optimize its Web3 laws. These proposals can serve as a blueprint for the country to tweak its cryptocurrency regulations.
Among the suggestions included was to restrict the liabilities borne by individuals who possess tokens in a Decentralized Autonomous Organization (DAO). Highlighting a recent ruling in the U.S. that holds any individual who currently or previously owned DAO tokens accountable for the DAO's legal violations, the report deemed it a regressive measure.
Besides, the report also suggests the U.K's top financial watchdog, the Financial Conduct Authority (FCA) to moderate its existing Know Your Customer (KYC) norms. Instead, it should embrace "alternative and innovative techniques," which include utilizing digital identities and blockchain analysis tools.
The report further recommends that the U.K refrain from undermining self-hosted wallets and from treating proof-of-stake services as financial services. Other suggestions include permitting private issuers of stablecoins to deposit their stablecoin reserves with the Bank of England, devising a “tax wrapper” for cryptographic exchanges, and creating a new sandbox within the Department for Science, Innovation, and Technology.
Meanwhile, the U.K.'s regulatory ecosystem has been toughening its stance on digital assets. His Majesty’s Treasury has been pondering over the possibility of banning all cold calls pushing cryptocurrency investments, while the FCA has cautioned local players in the crypto space to adhere to its advertising guidelines, failing which they could face substantial repercussions.
Published At
10/6/2023 9:44:00 AM
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