The FCA (Financial Conduct Authority) CEO has recently indicated that the UK and US authorities would work together and strengthen their relationships as they concentrate on crypto regulation. At a recent Peterson Institute for International Economics conference, the chief executive, Nikhil Rather, remarked, “One area of global concern is crypto, both benefits, and threats. There will be more cooperation between the United States and the United Kingdom on crypto-asset regulations and changes in the market, notably stable coins and the investigation of central bank digital currencies.” He emphasized the importance of the UK-US relationship and the fact that the two countries have similar views on regulation. “A clear, proportional reaction to regulation is what we both strive towards. I believe that we both have a strong desire to innovate. Regulators are held to account by our legal systems,” he said. Two of the biggest and most internationally integrated financial centers in the world are located in the United States.
According to the chief, many of the problems we confront need international cooperation. As the SEC, CFTC, and DOJ have shown time and time again, they can successfully act on a worldwide basis because of the FCA’s continued enforcement cooperation with these US authorities. He added that the Financial Conduct Authority (FCA) promotes crypto innovation without compromising consumer protection or fair trading. There is a lot of attention being paid to cryptocurrency regulation after the recent price collapse of major cryptocurrencies that resulted in huge losses. The EU has decided on its crypto Mica guidelines, which will be the first regulatory framework for crypto in the world.
The Queen’s Speech, released in May, defined the government’s legislative priorities for the next parliamentary year. There’s one measure in the works that attempt to promote “safe usage of cryptocurrency and robust outsourcing of technology providers.” In another, “powers to more swiftly and easily capture and reclaim crypto assets, which are the major medium used for ransomware,” are sought to be built up. The British government also put out a thorough strategy in April to make the nation a crypto center and “a welcoming environment for crypto.” Cryptocurrency regulation, stable coin regulation, and the creation of a non-fungible token (NFT) are all part of the strategy to build a proactive regulatory framework for crypto.
What Does This Mean for Crypto Moving Forward?
Some experts have suggested the need for regulation on aspects of the crypto industry is essential to ensure it survives, similar to how the gambling industry needs regulation to help users of new casinos online stay safe. Stable coins are a major emphasis of the Mica law, which is intended to apply to all 27 EU countries. Tokens that are backed by a basket of currencies, like Facebook’s now-cancelled project Libra, are considered asset-referenced tokens; e-money tokens, which are stable coins that are pegged to a specific currency; and utility tokens, which the issuers of the token can only use.
EU crypto issuers will be required to submit a white paper in the future. For now, enterprises offering any kind of crypto-related service must acquire regulatory certification from regulators in an EU jurisdiction. After receiving clearance from a single local government and complying with EU laws, they may do business across the European Union. A central bank-issued digital currency or a security token like a security deposit, treasury bill, or derivative is not covered under MiCA.
Stablecoins are expected to be the focus of UK crypto laws, according to experts. The Treasury’s March 2020 budget highlighted this problem. One measure that is likely to be implemented is a requirement that digital asset issuers obtain prior authorization before they can begin operations. Other measures include capital and liquidity requirements, auditing and accounting requirements, and the requirement that sufficient reserves be held in high-quality liquid assets. It’s inevitable that bigger crypto businesses would be able to meet these extra criteria since they have more infrastructure and financial resources. According to experts, a comparison might be made with President Joe Biden’s recent executive order. In March, President Joe Biden said that federal authorities should collaborate on their strategy for the crypto industry. The Bank of England, the FCA, and the Treasury were all members of a joint task group on crypto assets established in 2018.
Regulation of cryptocurrencies as a whole seems to be lacking in action in the UK. Bitcoin and Ethereum are not the only crypto assets that need regulation in the United Kingdom, according to experts. What happens next can also be influenced by the proposals made to the UK Treasury by crypto firms and trade associations. Several companies, including Gemini and crypto-trading organizations, have been in talks with the Treasury.
What Do Crypto Leaders Have to Say?
As a result of third-party prohibitions on cross-border transactions, Bitcoin was created. Regulators are under increasing pressure to undertake international initiatives to combat the crypto assets business, which has been making headlines recently due to a historic market crisis. Concerns about the “essential role” of stablecoins and crypto-asset loan platforms in the digital asset ecosystems, as shown by the recent collapse of Celsius and Terra, have been raised by watchdogs globally.
With regard to CBDCs, UK and US officials also discussed their intentions for policy study and technological investigation. According to a recent poll, nine out of 10 central banks are considering launching their own CBDCs. To leaders, the growing use of CBDCs inside the fiat-based monetary system is seen as an advancement of their respective functions rather than a revolution. According to them, interoperability is a major issue for cross-border CBDC payments since digital currencies of this kind are developed and deployed by governments all over the globe. As a consequence, prior to introducing these currencies, governments must coordinate their communications in order to ensure their success.