The City of London bets on cryptocurrencies after Brexit

Despite the fact that the cryptocurrency market is going through a cold winter after the collapse of the last few months, the United Kingdom accelerates plans to take advantage of its regulatory independence after the Brexit and convert to City of London into a global hub of crypto assets.

The so-called Edinburgh Reform, the British Government’s roadmap to definitively separate itself from the financial services regulations of the European Union (EU), proposes a legal framework for activities linked to cryptocurrencies that focuses on promoting innovation and in attracting investment to an industry that promises billion-dollar benefits.

In recent days, the Ministry of the Economy has also launched a consultation process to develop a “world leading regime” in the sector, which protects investors and at the same time contributes to the flourishing of the crypto asset lending business, precisely one of the areas that has triggered the current crisis.

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For London, the collapse of the market in 2022, which has evaporated the funds of millions of investors, is one more stage in the birth of a new sector.

Andrew Griffith, Secretary of State for the City and head of financial services at the Treasury Department, has compared the cryptocurrency crash to the bursting of the bubble of the first internet-linked companies in the late 1990s.

“It is probably inevitable that in an emerging and disruptive industry there are people who have made money and others who have lost it. It’s not unusual. It was like this in the early stages of the internet, just as it was in the early stages of steam trains.Griffith has described in the House of Commons Treasury committee

Under his direction, the United Kingdom aspires to legalize as a valid form of payment what are known as stable cryptocurrencies, private assets whose value is usually linked to that of traditional currencies such as the dollar, the pound and the euro.

At the same time, the Bank of England is examining the possibility of creating a digital pound sterling, already dubbed Britcoin by the press, which would act as a stable cryptocurrency backed by the public treasury, a possibility that the European Central Bank is also moving towards ( ECB).

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OUTSIDE THE EU

With its legislative proposals, which the main firms in the sector have welcomed, the United Kingdom is trying to go beyond the Crypto Asset Markets Act (MiCA) that Brussels has already advanced.

“Many of the details are yet to be worked out in the UK, but the UK and European regimes are expected to differ in a number of areas”Conor Macmanus, Director of Analysis of Financial Services Legislation at the PwC consultancy, explained to EFE.

“The European Union has created an independent framework for crypto assets, while the United Kingdom wants to modify the financial services rules that already exist” to incorporate them into the rest of the traditional assets, highlights the analyst.

London plans “they cover lending and decentralized finance (DeFi), areas that are not currently included in the European Union regime”, details Macmanus, who points out that the plan will support the viability of the industry in the long term.

“Complying with legal requirements will require investment by the sector, but doing so will increase the resilience of firms and their operating models, something that is essential”add.

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Asked about the attractiveness of the City in the global cryptocurrency landscape, the PwC expert warns that favorable regulation is only one of the necessary ingredients.

“There are many factors that determine the success of a financial center, regulation is key, but there are others that are also important, such as the ability to attract talent”warns.

WELCOME WITH OPEN ARMS

Binance, one of the world’s leading crypto asset exchanges, has welcomed the proposals.

“We firmly believe that a stable regulatory framework helps drive innovation and is essential to achieve trust”, a company spokesman said.

Coinbase, another of the large exchangers, which is listed on the New York Stock Exchange, celebrated for its part that the British Government has converted its “political ambitions” in “concrete regulatory proposals”.

“It’s great to see how Andrew Griffiths is providing the legal clarity we need to innovate,” said Faryar Shirzad, a former member of the US National Security Council as a financial adviser and current Director of Strategy at Coinbase.

Source: EFE