The United Kingdom’s Treasury Committee had suggested in May that unregulated cryptocurrencies should be treated like gambling. However, the HM Treasury strongly denies this proposal. According to Financial Services Minister Andrew Griffith, treating cryptoassets as a form of gambling goes against globally agreed recommendations from international organizations and standard-setting bodies. The UK government believes that a financial services regulatory framework is more suitable for addressing the risks associated with unbacked cryptoassets and fostering safe innovation.
Government’s Efforts to Regulate the Crypto Market
Despite rejecting the idea of regulating cryptocurrencies as gambling, the UK government acknowledges that certain cryptoassets and their underlying technology have the potential to improve efficiencies in financial markets and payments. The government supports the Treasury Committee’s balanced approach towards new innovation, including cryptoasset technologies. In line with this, the government is already working on regulatory legislation for the crypto market, which is expected to be implemented by the end of the year. HM Treasury and the Financial Conduct Authority (FCA) will collaborate with the industry to ensure that crypto firms understand the standards required for approval at the FSMA gateway.
UK’s Ambition to Become a Crypto Hub
The UK government’s stance aligns with its ambitions to establish itself as a crypto hub, as proposed by Rishi Sunak, the former finance minister and current prime minister. The government believes that a balanced approach to supporting new innovation, including cryptoasset technologies, is crucial. They aim to regulate cryptoasset activity, clarify the tax treatment of cryptoassets, and participate in international organizations to shape and develop international standards and recommendations.
Promoting Efficiency, Resilience, and Transparency
In addition to its regulatory efforts, the UK government plans to create Financial Market Infrastructure (FMI) sandboxes. These sandboxes will provide companies with the opportunity to experiment with blockchain technology, ultimately making the market more efficient, resilient, and transparent. By encouraging innovation and exploration of blockchain technology, the government aims to foster a thriving crypto market that adheres to regulatory standards and promotes the growth and stability of the financial sector.
In summary, the UK Treasury firmly disagrees with the idea of regulating cryptocurrencies as gambling. Instead, they advocate for a financial services regulatory framework to address the risks associated with cryptoassets. The government is actively working on regulatory legislation and supports a balanced approach towards supporting new innovation in the crypto market. Moreover, they plan to establish FMI sandboxes to encourage experimentation with blockchain technology and enhance market efficiency, resilience, and transparency. With these measures in place, the UK aims to position itself as a leading crypto hub while ensuring the safety and stability of the financial industry.
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