The US traditionally lacks crypto regulation and while it may be strangling innovation, the UK is looking to attract companies that cannot adapt to these regulations.
Over the past decade, the crypto space has emerged as a potential financial revolution, and lawmakers around the world are trying to figure out the best way to regulate it. However, some US lawmakers and companies believe the US is strangling innovation with its heavy-handed and often confusing approach to regulating cryptocurrencies.
The UK, though, hopes it won’t have to go down such road; therefore, companies seeking relief are looking for solace in UK Blockchain technology and markets.
Nuanced Approach to Crypto Regulation: A16z and Polygon Labs Proposal
Venture capital giant Andreessen Horowitz (a16z) recently called on the UK Treasury not to take the US’s heavy-handed approach to regulation, instead focusing on a more “nuanced” approach.
UK authorities had laid out plans in February to regulate cryptocurrency exchanges like they do other traditional financial venues, and a16z Head of Policy Brian Quintenz said the investment firm hoped to continue working with the Treasury to build “rules of world class that will protect consumers and allow this innovation to flourish.”
Said UK government proposed regulatory framework combines existing financial asset laws with updated crypto-specific rules. Polygon Labs, the driving force behind the Polygon Blockchain network and the 10th largest cryptocurrency MATIC, sent the response to Treasury and generated suggestions to Treasury, including a proposal that “unbacked crypto assets” should be treated differently than coins and tokens that have a team behind them and a value associated with other assets.
UK Crypto Welcome Mat: Turbocharged Exchange Relief from US Regulatory Pressures
US SEC Chairman Gary Gensler has taken an aggressive approach to enforcing compliance on major cryptocurrency brands, prompting a distant split from Republican politicians who feel the technology is crowding out.
This is the welcome mat the UK has rolled out for cryptocurrency companies seeking relief from US regulatory pressures, going so far as to say that the market has the potential to “accelerate” their cryptocurrency sector. Prime Minister Rishi Sunak made it clear, as finance minister, that he was interested in making the UK a crypto hub, mirroring moves made by Dubai, Singapore, and even Hong Kong, in recent years.
UK: A Web3 Innovation Hub for Blockchains
Coinbase CEO Brayan Armstrong recently had a meeting with UK Chancellor of the Exchequer and City Minister Andres Griffith to discuss the positive implications of the UK legislation and the vision it laid out for the UK to become a Web3 innovation hub.
Coinbase’s Armstrong laid out nine recommendations to the UK government in his speech at the London FinTech conference; including collaboration between the banking and FinTech sectors and the development of regulatory frameworks that promote stablecoins and tax treatments for crypto assets. All of these were elements that Armstrong felt would “cement his place” as the center of Web3, in line with Prime Minister Sunak’s vision.
The UK still has a bit of time left in terms of its regulatory framework, and whether it will succeed in becoming a crypto hub remains to be seen. However, the country’s concrete steps towards a crypto-friendly landscape could well help ensure the current and future success of cryptocurrencies.
By Audy Castaneda
