But crypto is not another banking product and any regulation needs to reflect that and not kill off innovation.
HM Treasury has announced its intentions to introduce robust crypto asset regulation; which aims to rebuild confidence and provide clarity for consumers and businesses alike. But according to William Je, Founder of Himalaya Exchange, these early steps will be a vital foundation for the UK’s long-term plan of becoming a global crypto hub, however, any regulation needs to actively avoid coming from the banking product playbook of regulation.
Je explains: “Following a turbulent year for crypto, the latest guidelines from HM Treasury aim to be the confidence boost UK-based consumers and businesses need right now in crypto. The Treasury is aiming to promote greater responsibility amongst crypto exchanges to ensure consumers can buy and sell crypto assets confidently and securely. It has opened up its plans to regulate for industry-wide consultation, something we will actively participate in.
“We remain in the early stages of crypto, yet its global market capitalisation currently tops $1 trillion. For the UK to help grow and contribute to the crypto industry, robust regulations must be in place to instil clarity and protection for those involved. Avoiding a ‘wild west’ crypto environment is the play being made by HM Treasury to ensure the UK develops into a global crypto hub.
“There will likely be critics when it comes to regulation, but it is important to consider the bigger picture when discussing crypto. Having the necessary regulatory framework in place is an attractive proposition but there is one central element regulators and the Treasury need to face up to it is simply not good enough to believe that crypto is somehow another banking product and therefore needs to fall under that regulatory framework.
“The way people buy, sell, and use crypto is dramatically different to say the way we open a bank account. Crypto was and always will be attractive to the billion of unbanked across the world so any regulation must not kill off innovation in this area,” added Je.
“Without hindering the progression of crypto and instead, harnessing its potential – UK crypto regulation will likely see an influx of industry investment and talent arriving in the near future. The UK will be able to legitimately pitch itself as a crypto hub for like-minded enthusiasts to work in an industry which is thoroughly regulated by a major economy and its respected institutions.”
The UK government’s latest announcement on regulating the crypto industry can be found here.
The recent scandal surrounding the FTX crypto exchange has cost investors billions of dollars. An event which rocked the industry and left both those involved and those outside of crypto with extremely low confidence levels in the crypto space.
Je continues: “The regulations are a strong endorsement of the potential crypto has to offer whilst at the same time reassuring users that industry actors – no matter how powerful – will be held to account here. The aim will also be to attract new money to the industry, people and organisations who are yet to begin their crypto journey will look to the UK as a legitimate market in which they can safely operate within.
“This necessary regulation is a convincing response to such a high-profile scandal to stimulate trust and accountability into the industry. For the UK to grow into a global leader of crypto, it cannot be seen as a spectator to this type of fraud, whilst investors lose out on large sums of money. The proposed regulations will ensure the crypto industry that the UK has a zero-tolerance approach for criminal activity of this kind.”
“The latest announcement from the UK government comes at the ideal time as confidence is low and confusion is high. The first steps of the UK developing into a global crypto hub have been taken as robust regulation looks to spell trust and opportunity for the future of the industry,” concluded Je.