Finance Lobbyists Raise Red Flags on UK Crypto Policy

UK finance lobby groups caution on risks of crypto regulation after UK government sought feedback on proposals

article-image

andreyspb21/Shutterstock, modified by Blockworks

share

Prominent lobby groups in conventional finance have raised concerns with the UK government regarding its intentions to regulate the crypto sector, warning against granting legitimacy to a market the groups say pose risks to consumers.

In February, the UK government initiated a consultation process regarding its comprehensive 82-page policy proposal for the crypto industry. 

The proposal emphasized the importance of enhanced dialogue between regulators and crypto companies, aiming to position the country as a competitive hub for sustainable finance.

Andrew Griffith, financial secretary to the UK Treasury, provided assurance in April that the consolidation of crypto regulations would be accomplished over the course of the next year or so.

Meanwhile, some powerful lobby firms have warned about regulations normalizing crypto, per the Financial Times

In one of several responses to the consultation, which concluded in April, the Institute of Chartered Accounts in England and Wales (ICAEW), which represents the UK’s Chartered Accounts, expressed its support for the government’s aspiration to establish the most transparent, well-regulated and technologically advanced capital market globally.

But it warned that cryptoassets carry different risks than traditional assets for regulated activities.

“By expanding the perimeter and authorising firms for crypto related activities, consumers might be justified in concluding that the perceived risks that are known about cryptoassets have been to some extent addressed or managed,” it added. “We know that this is not the case. Many of the propositions are yet to demonstrate a clear business case or economics that justify current asset valuations.”

The government proposes to define cryptoassets as not just cryptocurrencies, but tokenized versions of traditional financial assets. It also potentially includes any encrypted information that holds “value.”

The International Regulatory Strategy Group (IRSG), representing finance lobby group TheCityUK and The City of London Corporation, emphasized the necessity for significantly improved precision in the definitions outlined within the proposals, as highlighted by The FT.

The group suggested that the government should reconsider the broad definition, since almost all electronic systems rely on encryption to transmit data packets that could be seen as having value.

Meanwhile, the FT also noted that the Chartered Institute of Taxation and Association of Taxation Technicians, expressed concerns about the practical challenges faces by its members in handling crypto transactions. They urged the Treasury to specifically address the tax treatment of cryptoasset transactions.

Separately, the UK’s Tax Authority is considering the implementations of regulations that would grant the agency the authority to seize cryptoassets from businesses that have failed to meet their tax responsibilities.

James Carn, associate director in private client tax at wealth manager Evelyn Partners, told Blockworks that to ensure fairness, digital wallet funds should be accessible to HM Revenue & Customs if the holders owes tax and refuses to pay.

“It is noted that some practical issues will need to be addressed, in particular how HMRC will access certain wallets,” he added. “HMRC noted that there could be technical challenges in directly accessing crypto wallets, but the conclusion of the consultation is that evidence and legal questions will be examined over the next year with a view to pressing ahead with the proposals.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png

Research

With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.

article-image

The QT taper begins this month…but what does that mean for markets?

article-image

Plus, the rise of RWAs could bring about a significant shift in how real-world investments are managed and accessed

article-image

The distributed cell plan provider started selling its own hotspots in October 2023

article-image

The Brazil-based asset manager’s filing comes during a year of milestone bitcoin and ether fund approvals

article-image

The purchase of five sites in Georgia set to help CleanSpark hit its mid-year operating hash rate target of 20 EH/s

article-image

Plus, it’s beginning to look like we may be in for a cruel summer