The United Kingdom currently is suffering from economic stagnation. Small and medium enterprises (SMEs) are facing multiple problems such as high inflation, high interest rates, trade barriers with the European Union, and an overall shortage of skills. Centralized traditional finance in the UK is no longer enjoying the same level of credibility as it used to a few years back. As a result, people are reposing faith in cryptocurrencies. The crypto market continues to grow at a steady pace of 10.27%. The latest news that the UK will bring clear crypto regulations will indeed be good news for millions of crypto enthusiasts and investors.
UK Wants Crypto Regulations by July This Year
The UK treasury plans to regulate cryptocurrencies and stablecoins by July 2024. The main intention of the British government is to improve more innovations in digital assets and blockchain technology. Regulating cryptos will help in better consumer protection and will also catapult the UK’s position in the international crypto market. It also may increase the credibility of decentralized finance in the fintech market. The British government expects that after passing clear crypto regulations, the authorities will have the legal right to directly confiscate crypto assets from both custodian wallets and crypto exchanges of criminals.
Bim Afolami, the economic secretary to the UK Treasury, has emphasized the importance of crypto regulations. He opines that clear crypto regulations will be the cornerstone of our position as a world leader in fintech. Similarly, the government is working on proposals to address the issue of crypto staking and stablecoins. Furthermore, Afolami believes that the custody of customer assets and operating in exchange will have a regulator perimeter for the first time in British history. An open financial task force is also a part of the plan. He states that the financial task force will identify essential data sets, give necessary recommendations, and monitor commercial incentives to understand the SME lending case.
Potential Benefits of Crypto Regulations
Crypto regulations in the UK will be mostly beneficial to not only the crypto users within the UK but also worldwide. Here are some of the advantages, If crypto regulations become a reality.
Crypto Regulations Can Improve Lucid Legal Identification
Crypto regulations in a large economy such as the UK can ease legal complications while dealing with cryptocurrencies. Therefore, regulations such as the one proposed by the UK will build a sound macro policy foundation. The principle of the same regulations, same risk, and same activity are necessary for the government to have a proper tracking mechanism in case of violations.
Crypto Regulations Can Promote Information Sharing
These can help facilitate better international cooperation and information sharing. Blockchain technology is the main technology used in crypto exchange platforms. The technology can be used to improve the prospects of recording data with top-grade security. Regulations can improve cooperation between supervisors and competent authorities to supervise the crypto asset service providers.
Major Role in Anti-Money Laundering
This is surely the most important reason behind bringing regulations by the British government. While dealing with problems of national security, regulations can improve the state’s chances to fight against money laundering. Financing of terrorism and other unlawful activities may be reduced considerably with the help of these regulations.
Increase Trade and Liquidity
Since the UK government wants to bring in crypto regulations, it can lead to better trading and increase the liquidity of the cryptocurrencies. A well-thought-out plan to bring in regulations can boost the morale of many new traders who are skeptical of cryptos.
Also Read- Impact of Wars on Cryptocurrencies.
To Summarize
The decision of the UK government to regulate cryptocurrencies is not a novel one. A few weeks back, Hong Kong approved crypto ETF regulations and before that, the SEC in the US did the same with Bitcoin ETF. These decisions clearly indicate a paradigm shift in the attitude of the governments towards cryptocurrencies. The UK government’s decision will have repercussions on the position of decentralized finance in the world. There is a high possibility that the repercussions after July will be positive and largely beneficial for crypto investors.
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