Last week, the United Kingdom (UK) House of Commons published a briefing paper on the regulation of cryptocurrency. Following on the heels of the UK Law Commission's report on digital property, the paper again highlights the generally well informed and sophisticated level of debate in the UK on the regulation of digital assets.
The briefing paper covers, among others:
The definition and characterisation of cryptocurrencies and crypto-assets; and
The regulation of crypto-assets with a focus on:
the government's vision for the future;
protecting consumers;
registering crypto-asset businesses;
regulating stablecoins;
current and recent Parliamentary consideration; and
potential future consultation.
While Australia has yet to kick off its token mapping consultation, the briefing paper reiterates the Government's view (which has been echoed by the FCA, its main financial services regulator) that:
Most types of cryptoassets fell outside the regulatory perimeter and would continue to do so.
The UK Government has highlighted the growing attractiveness of stablecoins as a means of payment while acknowledging the risk to consumers and financial stability if not appropriately regulated. In April 2022, the UK Government announced an intention to regulate stablecoins or ‘digital settlement assets’, as a means of payment.
The briefing paper reinforces the notion that:
The market is…likely to welcome some regulation of the riskier parts of the digital asset landscape to offer consumers protection, providing that it does not stifle innovation or seek to control the way in which blockchain and distributed ledgers work.
On 25 January 2023, a debate on the regulation of cryptocurrencies took place in the UK Parliament. The Financial Services Minister, Andrew Griffith, pledged greater consultation with the crypto industry as the UK plans it post-Brexit financial services regime. Griffith stated that the government is likely to release a policy paper on crypto regulation within weeks and added:
We'll bring forward timely, sensible and balanced regulation in order to allow the safe use of this technology.
Meanwhile, the former Chancellor of the Exchequer, Phillip Hammond, was this week appointed Chairman of Copper, a leading light of the UK's crypto industry.
Last April, the UK announced ambitious plans to become a crypto-asset technology hub under another Chancellor, now Prime Minister, Rishi Sunak. Mr Griffith's latest comments indicate that the UK is still intending to take a progressive stance with respect to the regulation of cryptocurrency. Meanwhile, questions around Australia's progress remain unanswered. Can Australia catch up?