The United Kingdom’s Law Commission is gearing up to make the country a world leader in crypto regulations by providing a regulatory framework. The commission’s independent panel has decided to develop legislation surrounding digital assets, which will foster the growth of such technologies.
U.K. Wants to Lead Global Crypto Regulation
A report has been submitted by the panel to the government of the United Kingdom, listing their suggestions and final decisions towards adopting the recommendations. Judge Geoffrey Vos argued for updating the legal system of England and Wales to make the United Kingdom a prominent destination for the digital asset industry.
The U.K. Law Commission also released a report requesting the government to provide the required guidelines for regulating digital assets. Primarily, clarification is needed regarding the classification of these assets and whether they should be considered as a currency, or if they shall be viewed as collateral.
On June 19, the House of Lords approved the Financial Services & Market Bill (FSMB), the U.K.’s crypto regulations. This means that it will soon be a reality. The bill was initially centered around stablecoin regulations but was later modified to accommodate digital assets.
Every primary jurisdiction tries to develop indigenous versions of a comprehensive regulatory framework. The European Union is a pioneer with the Market of Crypto Asset (MiCA), which is just 18 months away from coming fully into effect. The lawmaker is even already considering the possibilities for its second version, MiCA 2.0.
Even if some counties come up with their own set of regulations, there will still be a requirement for a global set of regulations. For now, the primary need for the digital asset industry is to abide by anti-money laundering (AML) laws. Bad actors exploit this loophole without global regulations and flee to a neutral country to safeguard themselves.
Requirement for a Global Regulatory Framework
All said and done, besides creating a comprehensive global regulatory framework, the primary issue to address here is the classification of digital assets. The US Federal Reserve chair Jerome Powell recently acknowledged stablecoins as a form of currency. The SEC is trying to rebrand every other digital asset as a security; their classification needs to be clarified.
To address this problem, the panel suggested implementing legislation that officially designates a class or a category of personal property. Another suggestion was to form a new panel which shall include industry experts. This new panel would advise Prime Minister Rishi Sunak’s government on the legalities and technicalities of digital assets.
Last month, the U.K. panel found similarities between trading digital assets and gambling. The report then highlights the possible implications for regulating its trading in a way that is similar to gambling. If true, this would deviate regulators from the approach adopted by their counterparts in different jurisdictions.
The recent similarity drawn by the panel between Bitcoin investing and sports betting highlights their perspective on digital assets. Furthermore, it highlights the absence of intrinsic value, signifying price volatility, and the absence of discernible societal benefits. All of these traits differentiate digital assets from traditional financial assets.
In 2022, the United Kingdom Treasury considered becoming a leading global hub for digital assets, and steps were taken to regulate its businesses and to promote investment in countries through legislative proposals.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/06/29/u-k-law-commission-wishes-to-spearhead-global-crypto-regulations/