The UK is on the cusp of being a crypto hub — but only if it’s regulated properly
Britain is on the cusp of becoming a global crypto hub. Since becoming Prime Minister, Rishi Sunak has committed to make the UK a global science and tech superpower.
Recently, he announced £100 million of investment to put together an expert taskforce to help the UK build the next generation of safe AI, alongside a White Paper to guide the use of artificial intelligence in the UK.
The Government now has a huge opportunity to make crypto a part of this initiative and must not let it slip. This is a once-in-a-generation opportunity to make Britain the best - and safest - place to run a cryptoasset business, in turn benefiting and protecting the millions of British people that invest in these assets.
The UK is already moving in the right direction. With a well-established reputation as a world leader in FinTech, HM Treasury’s consultation on the future regulatory regime for cryptoassets presents the perfect opportunity for the UK to be a global leader in crypto too.
Delivering on the Government’s ambition to build an effective regulatory framework will allow the sector to grow, will create jobs, and will protect consumers by making this country one of the safest places to invest in crypto.
The Government, however, must act decisively. In the wake of last year’s FTX scandal, which saw at least $1bn of consumers’ money lost, and with increasing uncertainty in financial markets, the case for crypto regulation has never been greater.
The EU has also recently voted to pass its comprehensive crypto legislation - MiCA - which means the UK risks lagging behind other jurisdictions unless it moves swiftly. Luno, which is proudly headquartered in London and operates around the world, has identified three unique opportunities to ensure the Government’s proposals for regulation are robust enough to properly protect consumers.
This will allow the UK to use its pool of extraordinary tech talent to become a global centre of excellence in cryptoassets. Firstly, the Government should publicly commit to fully implementing a regulatory regime no later than the end of 2024.
While this isn’t standard practice for Whitehall, a target date would give the UK the best opportunity to obtain a competitive advantage and provide businesses and consumers with the protections and certainty that are so desperately needed.
Secondly, the Government should provide regulatory clarity on staking - a way to get rewarded for helping validate transactions and securing the network. Staking benefits consumers by enhancing the stability of the blockchain network and presenting a significantly lower risk of harm than lending because there is no transfer of title or custody.
And, finally, Luno would like to see the Treasury and the FCA create a set of metrics and reporting mechanisms to allow policymakers, industry, and the public to understand the efficiency and efficacy of the new authorisation process.
A degree of transparency in this regard will drive greater efficiencies and hold firms to a higher standard. This will provide a better environment for investing in crypto, by making it safer and giving people the confidence they need to turbocharge this industry.
City Minister Andrew Griffith, has rightly identified the opportunity that the crypto industry presents for the UK economy, recently noting that the technology can have a profound impact across financial services and that “by capitalising on the potential benefits offered by crypto we can strengthen our position as a world leader in fintech, unlock growth and boost innovation”.
Now Ministers and companies must work together to ensure crypto plays its part in helping the UK become a science and tech superpower, benefitting millions of consumers and laying the foundations for future growth and investment for decades to come.
Nick Taylor is head of public policy for EMEA at London-based crypto exchange Luno