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.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

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

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago

article-image

The final Bitcoin halving, where the mining reward becomes smaller than one satoshi, is expected to occur in 2140

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service

article-image

A fund by Laser Digital offers investors exposure to the Polygon network, while a new 21Shares ETP focuses on staking rewards from Toncoin