Regulation
Minister urges regulators not to ‘undermine’ London crypto scene with too many rules – DL News
- The UK has taken a different crypto regulatory path than the US.
- Officials want to make London a crypto hub.
- New legislation on stablecoins and staking could arrive this summer.
A senior UK government minister has urged regulators to ensure they monitor the crypto industry to ensure its success is not “compromised”.
Speaking at an event in London on Wednesday, Bim Afolami, economic secretary to the Treasury, said good regulation should not stifle the entrepreneurial spirit that drives technology companies.
“This is the kind of thinking that has undermined our success in this industry,” Afolami said at an event hosted by The Financial Times.
Successive Conservative governments have sought to fuel the development of cryptocurrencies alongside fintech over the past decade.
While UK lawmakers have long favored “light touch” regulation when it comes to the financial sector, authorities have cracked down on crypto amid growing concerns over money laundering and fraud.
“No one can make money”
Afolami already said regulators are too cautious and risk stifling innovation.
Regulations can be proposed appropriately depending on the activity they target, Afolami said.
Obtaining a banking license, for example, should be difficult, he said. “There are other areas where you want the barriers to entry to be low,” he said. “And we need to move away from the mentality that ‘higher standards are always better.’ »
Join the community to receive our latest stories and updates
“They’re not inherently better if you set up an unnecessarily complicated system where no one can make money and no one can innovate,” he said.
Afolami and other conservatives are eager to position themselves as a pro-business party as the inevitable general election approaches in the coming months. They insisted that digital asset businesses are welcome in the UK.
In 2022, Prime Minister Rishi Sunakthen British Chancellor of the Exchequer, pledged to transform the country into a crypto hub.
Regulatory refusal
But the Financial Conduct Authority’s priority is to protect investors against fraud. The FCA has set high anti-money laundering standards for crypto companies, cracked down on illegal crypto ATMs, and set tougher requirements for crypto marketing and advertising.
The FCA has only approved four crypto filers in 2023, DL News reported.
Afolami, however, was quick to add that the government and the FCA “worked well” together.
“I’m not saying I agree with every decision they make,” but “overall, they’re working with us,” he said.
Afolami said the government was still committed to Sunak’s vision and that the UK had made progress in this regard, pointing to “the large number of people, investors and businesses” who had moved to the Kingdom -United.
“If you ask them, as I did, why are you in the UK, they will say we are here because we know the government supports what we are doing,” he said.
Afolami said this contrasted with “some other countries” that do not support the industry.
“We have moved as quickly as possible in putting in place a sensible regulatory framework,” he said.
The Treasury, Bank of England and FCA have welcomed discussions on a bespoke regime for crypto assets. In contrast, U.S. regulators have said existing securities laws cover digital assets.
Afolami said new legislation was expected in Westminster this summer and would largely cover staking and stablecoins.
It remains unclear when broader rules will be applied to exchanges and other crypto market participants.
With the general election approaching this year, Parliament may not have time to consider the bill.
Joanna Wright is regulatory correspondent for DL News. Contact her at joanna@dlnews.com.