Britain can set the standard for cryptocurrency regulation if it acts fast, lawmakers have been told.
TheCityUK, the lobbying group for Britain's financial services sector, has published a white paper calling on Britain to put in place tailored regulation for the cryptocurrency sector. The paper said Britain could influence global policy by setting the standard for regulating crypto and take advantage of the booming sector by luring businesses with the certainty of rules.
"There is a fierce global race underway to see which applications of DLT [distributed ledger technology] and cryptoassets will win out, and who will grab the biggest slice of the value they promise," said Miles Celic, chief executive of TheCityUK. "The ultimate winner is for markets to decide, but government and regulators have an important part to play.
"They must set safe and robust rules for this burgeoning sector – while ensuring they don’t inadvertently squash good ideas before they can mature and flourish."
TheCityUK want regulators to draw up custom rules for the sector that take into account the different use cases and features of crypto technology. Some features — such as blockchain record keeping — don't need regulation at all, the group argues.
The call for regulation comes amid a renewed global boom for cryptocurrencies. The market has quadrupled in value to $1.5tn since last October as institutional investors like Tesla (TSLA) and Square (SQ) have ploughed money into bitcoin alongside amateur investors. Goldman Sachs (GS) said this week that cryptocurrencies should be treated as a new type of asset class.
"The UK has a great track record in supporting innovation with regulation," Celic said. "Its regulatory FinTech sandboxes, for example, have been copied around the world. Now we need to show similar vision and nimbleness in our regulatory approach to cryptoassets.”
TheCityUK said the UK should also capitalise on the "valuable opportunities" presented by central bank-backed digital currencies. Earlier this year UK chancellor Rishi Sunak said Britain was exploring a possible digital pound issued by the Bank of England — a project dubbed "Britcoin" in the press.
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