The United Kingdom Treasury has revealed a new proposed legislation with regards to digital assets and cryptocurrencies. This came just before the members of Parliament were set to debate the measures on how cryptocurrencies will be regulated.
A copy of the proposed legislation has been published, with the Treasury’s proposed modifications to the current regulation and rules for banking and payment systems. The 335-page bill outlines the United Kingdom’s plans to build the financial systems and markets. Any changes proposed will be aimed at strengthening the market after the country’s exit from the European Union – with plans in place to deal with any financial implications that might still come from Brexit.
The United Kingdom’s approach to digital currencies
In the financial bill, cryptocurrencies and blockchain-based assets, referred to as “digital settlement assets”, include assets that are both under technology that makes an asset cryptographically secure as well as other digital assets that are not.
The rules laid out by the Treasury speak largely to stablecoins and assets that are used for payments and settlements. Stablecoins, which are cryptocurrencies with a value that is pegged to an underlying asset such a fiat currency, are seen as assets that have the benefits of cryptocurrencies without the industry’s volatility.
It’s worth noting that other utility-focused cryptocurrencies (such as Ethereum, Cardano, and Solana) are not designed only for settlements and offer the industry and the development of Web3 more functional use than transactional payments.
Historically, the cryptocurrency market has had a turbulent time with regards to how the United Kingdom authorities regulate it. In June 2022, the country’s leading financial regulator issued a nation-wide warning for investors to take caution before investing in cryptocurrency. Not even one month later, however, the country’s chief financial minister commented that the United Kingdom intends to build itself to become a cryptocurrency powerhouse. The economic secretary to the Treasury echoed the financial minister’s sentiments, saying that the United Kingdom is “the very best place in the world to start and scale crypto-companies”.
The Treasury’s plans to make the United Kingdom a crypto hub includes establishing a sandbox in the financial market infrastructure. This will be designed to give crypto companies, like Bitcoin Prime , a space to experiment and innovate within the economy with the aim to explore how the digital asset industry can be actively integrated into the traditional systems. The Treasury hopes that this will encourage the development of cryptocurrency as a major player in growing the financial sector.
Meanwhile, the country’s Financial Conduct Authority (FCA) has ordered companies that offer cryptocurrency services and products to register with the regulator. Despite the apparent conflict with the financial regulators, Treasury has stated that it is aware of how cryptocurrency might offer a way for criminals and hostile states to take advantage of the anonymous space. To contend this and still make way for innovative exploration, Glen stated that the country will not compromise on anything that might risk national tension or investor’s security, noting that all anti-money laundering (AML) regulation and know-your-customer (KYC) protocols are paramount to the industry.
Cryptocurrency is still a nascent space and countries across the globe are still working on how to regulate the industry without crippling innovation. Finding the line between companies having freedom to experiment in the emerging industry and protecting investors from scams and hacks requires strategic regulation.
As more countries adopt cryptocurrency into their legislation, with rules and protocols in place, we’ll likely see how the industry overall will offer users and investors a way to use the assets; both in payments and financial fields as well as other functional uses with smart contract technology.
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Source: https://thecryptobasic.com/2022/07/26/the-united-kingdom-treasurys-new-crypto-proposal/?utm_source=rss&utm_medium=rss&utm_campaign=the-united-kingdom-treasurys-new-crypto-proposal