We have talked about the United Kingdom’s efforts to rein in the unbridled progress of cryptocurrencies, focusing on eliminating illegal practices. First, it was the Bank of England that spoke, while not against the whole crypto industry, at least against the part of it that supported illicit activities.
Governor Mark Carney was quite resolute in his opinion that cryptocurrencies should be regulated so much that they will not allow individuals to create liabilities for investors who have been mislead by promises for significant riches.
Now, this is about to change even furthe with the UK stepping up its game. Instead of taking the hawkish approach, the United Kingdom may adopt a more lenient, dovish stance instead.
The world in 2018 is likely to take a more legal approach to cryptocurrecies and try to elaborate a way for them to work out in full. With this in mind, the country’s Financial Conduct Authority (FCA) has decided to embrace change and act quickly where cryptocurrencies are concerned.
The FCA and the BoE are now both working on a task force that will help regulate cryptocurrencies and charter the way for a meaningful eco system including both digital assets and FIAT money. The announcement came in March, with the two institutions vowing to regulate and foster the expanding industry of crypto gold.
The partnership has hardly stopped at a few facile promises. Instead, BoE and FCA have focused on creating a fintech sandbox with global reach that would help them attract more promising fintech companies willing to assist in the further development of the sector.
To do so, however, the FCA would need a broader picture of the whole industry, including the discreet nooks and crannies that are not always credible and entirely legal for that matter. With this in mind, the FCA has been working on an analytica report to gauge the overall status of cryptocurrencies.
The financial arm also plans to launch cryptocurrency derivative offerings. Crytpocurrencies have already been successfully treated as precious metals derivatives in France and Austria.
This is a refreshing change in the attitude towards cryptocurrencies in general. While commercial banks have been deciding on their own when to endorse cryptocurrencies and when to dismiss them, central banking regulators have been rather slow to act.
All of it seems slated to change with the regulations that will now be introduced into the sector, allowing for more credible partners to plunge right into it.
The overall patchwork of regulation
The changing in the regulatory landscape will lead to meaningful changes across the whole sector in both the United States and the United Kingdom.
Meanwhile, China is pushing away from mainstream regulation and preparing to drive its own forays into digital money, and further extricating itself from any dependence on FIAT currency. This will certainly create rifts in regulation and perhaps spawn two separate and distinct international financial orders.
However, the majority of western institutions are now focusing on aptly regulating the finance industry. According to Jacob Ghanty, a UK law firm Kemp Little partner, the FCA is now trying to push ahead of the changes other countries anticipate and established a credible framework for the regulation of cryptocurrencies. Something that has been long overdue.
At a high level, there is pressure on the UK authorities to develop a comprehensive strategy towards crypto, as sooner or later the EU will develop its own approach meaning there will need to be compelling reasons for crypto firms to locate in the UK.
So what do regulations do for the ordinary investor?
Regulations will be beneficial to entrepreneurs and companies alike. With regulations firmly set in place, people may invest more readily and without having to worry that they will be one-upped.
Crypto trading is now going to add more flesh to its claims to be a secure activity, and beneficial to all parties involved. FCA is certainly interested in providing investors with opportunities to trade and jump in on the bandwagon of crypto gold, not only for the purely monetary value of such an act, but also because it will allow it to acquire experience first hand in controlling these elusive chunks of value.
In conclusion, Britain is definitely warmping up to the idea of engaging with cryptocurrencies. Even the British Conservative Member o Parliament Matt Hancock has been quite vociferous in supporting the cryptocurrencies. With this in mind, it is quite likely to expect a larger political endorsement of cryptocurrencies, such as they are.
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