Whatever you think of cryptocurrencies, it is clear that they are a financial innovation.
Despite some enthusiastic (excessive) adoption by retail investors, it is still not a dominant asset in the UK. But there are indications that the financial institution is softening its stance. This has been strongly encouraged by the Treasury, seeing new opportunities to attract innovative companies (and provide work for the British army of regulators). It’s not a turn In itselfbut a file détente Its a frosty tale of hostility and confusion.
In early April, the government laid out plans to make the UK a “global hub for crypto-asset technology.” This represents a clear shift. Talk of “stablecoins,” “sandboxes” and even “crypto-fingerprints” seem far from the stern warnings about bitcoin scams that everyone was receiving in 2018 and 2019. The Treasury now appears eager to join the revolution, but it’s fair Say that the messages from policy makers are not consistent. Politicians may see the crypto revolution as a way to expand Britain, but the more dangerous end of the asset class still leaves regulators nervous.
London wants business
Madeleine Hume, Senior Research Analyst at Morningstar, covers the cryptocurrency worldview in great detail here, so I have no intention of revamping this area. However, the fact that there are crypto ads in the Super Bowl and Formula 1 creates a deafening hum.
And while this affects the global conversation, the UK is perhaps in a unique position in its approach to cryptocurrency. After the financial crisis, we have an extensive regulatory infrastructure that includes multiple agencies. Some of these plumbing risks may not be keeping pace in this new world of digital assets – a topic that Morningstar UK editor Olly Smith has considered in detail.
However, London has historically been a center of financial innovation. After Brexit, it is clear that ministers want to attract inward investment. Britain must be “open for business”, whatever form it takes. Many of the fastest growing tech companies will have some crypto or blockchain connections, and conservatives do not want to be seen as deterring them, given that they can choose anywhere else in Europe, such as Stockholm, Dublin or Paris. It’s not a unifying message though.
For example, cryptocurrency exchange Binance was recently welcomed in France after the UK rejected it as a “registered digital asset service provider.” (The FCA said that Binance did not answer some of its questions when asked.) Perhaps the UK’s approach to coding can be compared to muddled parenting, then. Treasurer is the ardent white water rafting enthusiast, while the FCA is the risk averse when considering the risks.
If there is one consistent theme across this thread, the supposed point is that the main upside for cryptocurrency adoption is that it will upend funding in the UK.
The Bank of England addressed this directly in the introduction to its March report: “Over the past decade, there has been rapid innovation in how people make payments, and the Covid-19 virus has accelerated these trends…The use of physical cash in payments continues. in decline and request comfort, Especially when it comes to e-commerce It nourishes the general appetite for digital payments. (author’s italics)
Let’s de-select this: the bank says the public is demanding change, which is related to the transition to a cashless society. This also answers one of the main complaints of crypto skeptics: that coins have no practical value other than speculation. Instead of “holding on to dear life” (HODL) in the hope of future gains, consumers will use tokens to purchase goods and services. At least that’s it idea.
invent, Then to organize
Never misses a bustling bandwagon, British politicians now look like they’re on the cusp of cryptocurrency.
“My ambition is to make the UK a global hub for crypto-asset technology, and the measures we have outlined today will help ensure companies can invest, innovate and expand in this country,” said Sunak, announcing notably few measures (and presumably further intimidation from the FCA) FCA), which is supposedly still looking for a crypto-head).
“By effective regulation, we can give them the confidence they need to think and invest for the long term. This is part of our plan to ensure that the UK financial services industry is always at the forefront of technology and innovation.” “Innovation” is totally the catchphrase, and it’s not just Snack who is guilty of pouring it on the word salad. The Bank of England and the Financial Conduct Authority (FCA) reports the term too much.
Despite all its involvement in the hype, the FCA’s stance remains the same.
“Crypto assets are considered high-risk speculative purchases,” she says.
“If you buy crypto assets, you should be prepared to lose all your money…the crypto-asset market is a target for fraud and fraud, so you should be very careful.” Although it may change soon, encryption is still not regulated in the UK. In the long run, Snack will likely be long gone from the closet by the time any of his dreams come true.