Ben Strack

Chase UK’s decision to ban crypto transactions for customers is “not a big deal,” an industry CEO told Blockworks.&nbsp;



Still, it’s a “nonsensical” decision that goes against the country’s crypto policy goals, as well as efforts by the firm’s parent company, according to Jesper Johansen, founder and CEO of crypto service provider Northstake.



Clients of the UK subsidiary of JPMorgan <a href="https://blockworks.co/news/chase-uk-crypto-ban#">will not be able to make crypto transactions</a> via bank transfer or debit card starting next month, the company said in an email to customers Tuesday.



Crypto-related transactions, including wire transfers to crypto exchanges, will be declined from October onwards, a Chase spokesperson told Blockworks, citing crypto scams targeting UK consumers.



“Firstly, this ban contradicts the UK government’s stated policy goal to develop favorable conditions and a supportive environment for crypto businesses to set up and scale their services,” Johansen told Blockworks. “Secondly, this ban contradicts JPMorgan’s ambitions to scale its own bank-led blockchain platform and JPM Coin.”&nbsp;



JPMorgan’s <a href="https://www.jpmorgan.com/onyx/onyx-digital-assets.htm">Onyx Digital Assets</a> network enables the tokenization of traditional assets, such as US Treasurys and money-market products. The company <a href="https://blockworks.co/news/jpmorgan-trade-on-public-blockchain-monumental-step-for-defi">used the Polygon blockchain to trade tokenized cash deposits</a> in November 2022.&nbsp;



Still, JPMorgan Chase CEO Jamie Dimon has repeatedly criticized the asset class, calling bitcoin a “hyped-up fraud” in January during an <a href="https://www.youtube.com/watch?v=qdIooHrQeK8">interview</a> with CNBC.



Caspar Sauter, co-founder of decentralized exchange D8X, noted that while Chase UK’s actions follow a trend in the banking sector, its approach “distinctly contrasts” that seen in other European regions.&nbsp;



NatWest is among the UK-based banks that have <a href="https://blockworks.co/news/uks-natwest-paysafe-distance-from-crypto-as-banks-roil">placed restrictions on customers</a> sending money to crypto exchanges.



Read more: <a href="https://blockworks.co/news/crypto-startups-uk-bank-accounts">Crypto startups find UK banks won’t give them accounts</a>



“Notably, these limitations are not mandated by UK regulations but are decisions made independently by the banks themselves,” Sauter told Blockworks.&nbsp;



Meanwhile, Swiss banks like Sygnum already offer digital asset banking services, Sauter added. State-owned Luzerner Kantonalbank shared plans to introduce similar offerings in the country.&nbsp;



Germany-based Deutsche Bank said earlier this month it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish digital asset custody and tokenization services</a> through a link-up with crypto infrastructure firm Taurus.



“It&#8217;s anticipated that a majority of European banks will embrace digital asset banking services in the coming years,” Sauter said.



Coinbase CEO Brian Armstrong called the move by Chase UK “totally inappropriate” in a Tuesday X <a href="https://twitter.com/brian_armstrong/status/1706787540215460155">post</a>. He added that the bank’s decision appears to not respect policy goals set by UK Prime Minister Rishi Sunak.&nbsp;



Sunak <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub">said</a> in an April 2022 statement that he wanted to make the UK “a global hub for crypto asset technology.” Andrew Griffith, the economic secretary to the UK Treasury, noted in April that <a href="https://blockworks.co/news/uk-could-see-live-crypto-regulation-within-12-months">crypto regulations would be finalized in the next 12 months</a>.



“This move by Chase illustrates the size of the hill that the UK government will have to climb to deliver on their stated policy goal for crypto businesses,” Johansen said.



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‘Nonsensical’ but ‘not a big deal’: Execs weigh Chase UK’s anti-crypto move   

Katherine Ross

The Financial Conduct Authority gave crypto firms marketing to UK customers a “final warning” ahead of the financial promotion regime implementation.&nbsp;



The regime comes into effect on Oct. 3.&nbsp;



“All firms marketing crypto assets to UK consumers, including firms based overseas, must comply with this regime,” a letter from the FCA stated.&nbsp;



The FCA published a <a href="https://www.fca.org.uk/publications/good-poor-practice/firms-preparations-cryptoasset-financial-promotions-regime#:~:text=and%20poor%20practice-,Firms'%20preparations%20to%20comply%20with%20the%20cryptoasset%20financial%20promotions%20regime,on%20good%20and%20poor%20practice&amp;text=Ahead%20of%20the%20cryptoasset%20financial,understand%20how%20prepared%20they%20were.">post</a> detailing good and bad practices on Sept. 9.



“It is up to consumers to decide whether they buy crypto assets, but they should do so based on fair and accurate information that helps them make effective investment decisions,” the FCA said. As part of the&nbsp;



The Sept. 21 <a href="https://www.fca.org.uk/publication/correspondence/final-warning-cryptoasset-firms-marketing-consumers.pdf">letter</a> comes as the FCA expresses concern about the “poor engagement from many unregistered, overseas crypto asset firms who have UK customers…”



The letter also said that the firms “refused to engage with the FCA” despite efforts, and “only 24 firms responded to a survey that was sent to over 150 firms.”&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/uk-proposes-bringing-crypto-under-regulatory-eye">UK proposes bringing crypto under regulatory eye</a>



Once the regime is in place, unregistered firms caught violating the law could face “up to 2 years imprisonment, an unlimited fine, or both.”



As <a href="https://blockworks.co/news/uk-fca-deadline-crypto-marketing-regulation">part of the new framework,</a> crypto companies are expected to make their marketing fair and accurately labeled with risk warnings. Campaigns that engage in incentive schemes are prohibited, such as marketing that uses a refer-a-friend bonus.



The regulations establish four legal avenues to market to UK customers, which include both qualifying for exemptions and regulatory approval.



“From this October, crypto firms must market to UK consumers clearly, fairly and honestly. And they must provide risk warnings people understand,” said Lucy Castledine, director of consumer investment, in a statement.



However, in early September, the regulator <a href="https://www.fca.org.uk/news/press-releases/fca-sets-expectations-ahead-incoming-crypto-marketing-rules">said</a> that there was a possibility that some firms could be given until Jan. 8 of next year “to introduce features that require greater technical development.” Firms are required to submit an application for flexibility, and they must be registered or authorized with the <a href="https://blockworks.co/tag/fca">FCA</a>.



Earlier this week, the former chair of the FCA <a href="https://blockworks.co/news/uk-fca-crypto-firms">alluded to politicians pushing for crypto</a> firms to enter the market and insinuated that the regulator should have been more cautious.



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FCA issues ‘final warning’ to crypto firms ahead of Oct. 3 marketing regulation rollout

The Economic Crime and Corporate Transparency Bill is making its way through the final stages of approval after going through the House of Lords.



The UK bill, initially introduced in September of last year, would expand authorities&#8217; abilities to seize and freeze crypto used in crimes including money laundering and drug trafficking.



It has passed through both the House of Commons and the House of Lords, meaning that it just has to go through a consideration of amendments in the House of Commons before it is made law through Royal assent. Essentially, King Charles will formally agree to make it law.



According to the bill’s <a href="https://bills.parliament.uk/bills/3339/stages/17945">site</a>, the consideration of amendments is scheduled to take place on Oct. 18.



“We hope we can ensure that enforcement takes place once it is on the statute book, so that dirty money can be exposed, illegal assets can be seized, and action is taken against those who are guilty of economic crime. We must not have further delay in pushing for transparency and action in tackling economic crime,” Labour MP Rushanara Ali <a href="https://hansard.parliament.uk/commons/2023-09-13/debates/6B54D16C-EB32-4B94-A02C-D1128422C107/EconomicCrimeAndCorporateTransparencyBill">said</a> according to a transcript.



The legislation would link to the Proceeds of Crime <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/317904/Fact_Sheet_-_Overview_of_POCA__2_.pdf">Act</a> 2002, which “sets out the legislative scheme for the recovery of criminal assets with criminal confiscation being the most commonly used power.” The new legislation would make it easier for authorities to seize and freeze crypto linked to criminal activities.



The UK has been cracking down on crypto, from <a href="https://blockworks.co/news/crypto-uk-ads">ads</a> to <a href="https://blockworks.co/news/uk-travel-rule-crypto-reporting-requirements">crypto transaction reporting</a>. In July, it threw out a proposal to <a href="https://blockworks.co/news/uk-crypto-gambling">regulate crypto trading and investing</a> like gambling.



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UK bill focused on seizing illegal crypto moves to final stages

James Cirrone

If you followed bitcoin mining news over the last two weeks, you may have seen social media chatter about how the practice doesn’t actually use as much electricity as you’ve been led to believe.



And that is true, based on the Cambridge University Bitcoin Electricity Consumption Index (CBECI), which gives daily estimates on the network’s energy demands. 



Upon revising the popular <a href="http://ccaf.io/cbnsi/cbeci">index</a> on Aug. 31, researchers realized that previous assumptions regarding Bitcoin&#8217;s energy consumption had previously been overstated.



For example in 2021, when bitcoin mining was extremely profitable, Cambridge’s <a href="https://www.jbs.cam.ac.uk/2023/bitcoin-electricity-consumption/">previous model</a> estimated that the network sucked up 104 terawatt-hours (TWh) of electricity. The revised model shows that Bitcoin consumed 89 TWh, representing a 15 TWh difference.&nbsp;



Based on <a href="https://www.eia.gov/tools/faqs/faq.php?id=97&amp;t=3">data</a> from the US Energy Information Administration, 15 TWh could power over 1.4 million average American homes in a year.



Following these revelations, Daniel Batten, the co-founder of climate conscious CH4 Capital, took to X, formerly Twitter, to say “the tide has turned in the narrative around Bitcoin &amp; energy.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">OK I&#39;m calling it The tide has turned in the narrative around Bitcoin &amp; energy In last 90 days &#8211; Cambridge admit <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> energy calculations overstated &#8211; 2 academic papers (incl MIT) state environmental benefits to Bitcoin &#8211; KPMG report Bitcoin has positive ESG rating&mdash; Daniel Batten (@DSBatten) <a href="https://twitter.com/DSBatten/status/1697369452919275953?ref_src=twsrc%5Etfw">August 31, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



JPMorgan also responded to Cambridge’s downshift of Bitcoin’s energy footprint, lowering its bitcoin production cost estimate to $18,000 from $21,000.



But why did Cambridge researchers change the methodology of the CBECI? Alexander Neumüller explains.&nbsp;



<h2 class="wp-block-heading">Why the sudden pivot?</h2>



Neumüller is a research associate at the Cambridge Center for Alternative Finance, where he leads all investigations into the climate impact of digital assets, including Bitcoin.



Neumüller told Blockworks that researchers needed to revise the CBECI to more accurately reflect how different mining machines contribute to the overall hash rate.&nbsp;



The previous model assumed that all miners, no matter how powerful, were contributing equally to the network hash rate.&nbsp;



“This doesn’t make sense,” Neumüller said bluntly.&nbsp;



Neumüller explained that the computing power of ASICs — a type of dedicated hardware used to mine bitcoin and other proof-of-work cryptocurrencies — has drastically increased in the last several years.&nbsp;



For example, Bitmain’s Antminer S9 from 2016 had a hash rate of 11.5 terahashes per second (TH/s), whereas the Bitmain S19 XP Hydro from 2022 achieved 260 TH/s.&nbsp;



Additionally, the previous model factored in all mining machines that were profitable, which ended up skewing electricity consumption numbers during times of superb mining profitability.



Neumüller referenced older mining machines like Bitmain’s Antminer S5, released in 2014 with a hashrate 1.155 TH/s, which obviously don’t require as much energy as the current top-of-the-line models.&nbsp;



“Suddenly mining profitability spiked in 2021,” Neumüller told Blockworks. “I think an [&#8230;] Antminer S5 was still profitable. And what that means is that suddenly, an S5 fueled an equal amount of hash rate as a much newer device.”



“The most recently released devices by that time were already having up to 100 terahashes. So this was the issue,” Neumüller added.



Considering this explosion in hashing prowess, the model for calculating electricity consumption had to change.



Now, the CBECI doesn’t consider miners that aren’t profitable at “reasonable electricity rates.” It also takes into account the age of mining equipment and how devices tend to depreciate in value.&nbsp;



Many public mining companies, Neumüller explained, use a five-year depreciation schedule for their hardware. This means that a brand new device’s value drops 20% each year until it&#8217;s considered practically obsolete after five years in operation.



Neumüller posits that when a miner&#8217;s value decreases, it contributes less to the overall network hash rate and subsequently consumes less energy. So, even if a miner older than 5 years remains profitable, it won&#8217;t be accounted for in the CBECI.



That assumption briefly sums up the new model for the CBECI, and according to Neumüller, it avoids the previous trap of old mining machines being erroneously included in the index.&nbsp;



That was what was leading to the overstated electricity consumption, especially since 2021.



“It&#8217;s really more [&#8230;] how can we find an anchor that helps us to account for much older machines being less weighted than the new machines. Because in the end, that helps us to associate the right weight in terms of what drives hashrate,” Neumüller told Blockworks.



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Why did Cambridge revise its bitcoin electricity consumption index?

Casey Wagner

<div id="highlights-block_624b07f6e2bb3" class="highlights">
 <ul>
 <li>The UK plans on being a leader in stablecoin regulation, a new report says</li>
 <li>Legislation will be introduced in Parliament when possible, the finance ministry said</li>
 </ul>
 
</div>



The United Kingdom’s finance ministry intends to prioritize regulating stablecoins that are used as means of payment.



In a report released Monday, the ministry said it will be releasing further regulatory guidelines this year in order to protect consumers while fostering innovation around digital assets.



“This response document confirms the government’s intention to take the necessary legislative steps to bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory perimeter, primarily by amending existing electronic money and payments legislation,” the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1066166/O-S_Stablecoins_consultation_response.pdf" target="_blank" rel="noreferrer noopener">report</a> read. 



Stablecoins are expected to become a “widespread means of payment” in the near future, the ministry predicts.&nbsp;



The report, which investors and industry leaders have been anticipating since late March, highlights the ministry’s desire to be at the forefront of stablecoin regulation.



US lawmakers have been debating how to approach the growing stablecoin industry in recent months as well, most notably <a href="https://cms.blockworks.co/democratic-rep-stablecoin-issuers-dont-have-to-be-banks-with-100-reserves/" target="_blank" rel="noreferrer noopener">floating the proposal</a> that stablecoin issuers would have to be a registered and insured bank.



The UK is also considering implementing a regulatory framework around stablecoins that mirrors the existing guidelines around banks. Stablecoin reserves in particular are a main concern for the ministry, which suggests in the report that “stablecoins would be backed by central bank liabilities, deposits at commercial banks, or in high quality liquid assets respectively.”&nbsp;



In terms of accepting stablecoins as a means of payment, the report notes that the Electronic Money Regulations 2011 and Payment Service Regulations 2017 provide ample guidelines that can be easily applied to new digital asset technology.&nbsp;



“The government considers that an amended e-money framework can deliver a consistent framework to regulate stablecoin issuance and the provision of wallets and custody services,” the report read.



<blockquote class="wp-block-quote">“Establishing a regulatory environment for stablecoins used as payment simultaneously creates a basis to enable market entry to support innovation, while ensuring that appropriate regulatory standards apply for the benefit of customers, market integrity and stability.” </blockquote>



The report focuses on how the government can safely and quickly bring stablecoin technology to consumers and interested parties.



“For consumers, bringing stablecoins into the regulatory framework means they will be able to use stablecoin services with confidence,” the report read



The government plans to introduce legislation to Parliament when possible, the report noted. A specific timeline was not given.



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UK Aims To Let Consumers ‘Use Stablecoin Services With Confidence’

<div id="highlights-block_61e6ee4b93e84" class="highlights">
 <ul>
 <li>The UK’s Advertising Standards Authority censured Arsenal Football Club last month for promoting tokens to fans without proper warnings</li>
 <li>The government’s plan follows similar efforts by agencies in Spain and Singapore</li>
 </ul>
 
</div>



The UK government shared plans to bolster its rules on crypto advertisements in an effort to protect consumers from misleading claims.&nbsp;



The plans call for bringing the advertising of cryptoassets under the rules of the Financial Conduct Authority (FCA) — the same standards that stocks, shares, and insurance products are held to, the UK government <a href="https://www.gov.uk/government/news/government-to-strengthen-rules-on-misleading-cryptocurrency-adverts" target="_blank" rel="noreferrer noopener">revealed Tuesday</a>.



The UK launched its Cryptoasset Taskforce in 2018, and Rishi Sunak, Chancellor of the Exchequer, said in a statement that the government is eager to support innovation in the crypto space.



“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest, but it’s important that consumers are not being sold products with misleading claims,” Sunak added. “We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.”



The number of consumers in the UK holding cryptocurrency was estimated to be 2.3 million, according to <a href="https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021" target="_blank" rel="noreferrer noopener">an FCA report</a> published in June.



Though the Advertising Standards Authority (ASA) has been trying to respond to the complaints about misleading crypto promotions, the agency needed support from the FCA given the scale of the problem, according to ​​Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown. The ASA could only censure firms after the ads had been posted, she added.



The <a href="https://www.asa.org.uk/rulings/arsenal-football-club-plc-a21-1121873-arsenal-football-club-plc.html" target="_blank" rel="noreferrer noopener">ASA censured Arsenal Football Club</a> last month for promoting tokens to fans without proper warnings. The watchdog told the organization to ensure its future ads “did not trivialise investment in crypotassets” and make “sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated.”



The UK rule changes will come through legislation to amend the Financial Promotion Order, which sets out the investments and activities to which the financial promotion regime applies, according to the government’s announcement.



<blockquote class="wp-block-quote">“Once this new legislation is passed, firms promoting crypto products will have a much higher bar to jump to show that ads are fair, clear and not misleading and companies could face hefty fines for serious breaches,” Streeter explained in an email. </blockquote>



The UK government’s plans follow <a href="https://www.cnmv.es/portal/verDoc.axd?t=%7B1cbaf61c-57c2-4830-bd6a-071f806795e2%7D" target="_blank" rel="noreferrer noopener">rules outlined by Spain’s national securities market commission</a> on Monday. The agency establishes that the advertising of cryptoassets must include “clear, balanced, fair and non-misleading content and information on the risks in a prominent manner,” among other measures.



The Monetary Authority of Singapore (MAS) also <a href="https://cms.blockworks.co/singapore-issues-guidelines-targetting-crypto-promotions-to-general-public/" target="_blank" rel="noreferrer noopener">released guidelines Monday</a> urging that digital payment tokens providers should not downplay the risks of crypto trading. Regulated providers, including banks and financial institutions, are now barred from promoting their crypto services to the public through any means except through their own websites, social media accounts or mobile applications.



In the US, <a href="https://cms.blockworks.co/voyager-estimated-quarterly-revenue-doubles-despite-lawsuit/" target="_blank" rel="noreferrer noopener">a complaint filed against Voyager Digital</a> last month alleges that the firm is “targeting unsophisticated investors with false and misleading promises of reaping large profits in the cryptocurrency market.” A Voyager spokesperson called the action “absolutely spurious and without any merit.”



“The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra cheap money,” Streeter said. “As speculation swirls about how rapidly central banks will tighten mass bond buying programmes and start raising interest rates, given soaring inflation, they are likely to stay volatile.”



The price of bitcoin was about 41,600, as of 11:30 a.m. ET, according to CoinGecko — down nearly 40% from its all-time high of more than $68,000 in November. 




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UK Government Seeks to Boost Regulation of Crypto Ads

Macauley Peterson

<div id="highlights-block_61bb6de2d796b" class="highlights">
 <ul>
 <li>The Bank of England raised interest rate by 15 basis points to 0.25%, in a near unanimous vote</li>
 <li>The European Central Bank leaves rates unchanged, but will taper its government bond purchases</li>
 </ul>
 
</div>



The Bank of England’s monetary policy committee (MPC), decided on Thursday to raise its Bank Rate to 0.25%, according to <a href="https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2021/december-2021" target="_blank" rel="noreferrer noopener">the committee’s minutes</a>, in a bid to dampen inflation. The 12-month CPI rate jumped from 5.1% in November, up from 3.1% in September, and the highest level since September 2011. The Committee voted by an eight to one margin in favor of the rate hike.



The move comes a day after the US Federal Reserve’s analogous group left rates unchanged but also <a href="https://cms.blockworks.co/fed-gets-hawkish-doubles-taper-signals-three-rate-hikes-in-2022/" target="_blank" rel="noreferrer noopener">moved to tighten monetary policy</a> by decelerating its asset purchase program more quickly than earlier planned.



Like the Fed, the Bank of England (BoE) policymakers expect that upward pressure on CPI inflation is driven primarily by supply disruption and should dissipate over time, returning closer to the committee’s long-term 2% target rate.



The MPC notes that the Omicron Covid-19 variant is spreading rapidly in the UK, but it’s medium-term economic effects remain unclear, while inflation has risen faster than anticipated.&nbsp;



The International Monetary Fund (IMF) UK staff weighed in with <a href="https://www.imf.org/en/News/Articles/2021/12/14/united-kingdom-staff-concluding-statement-of-the-2021-article-iv-mission" target="_blank" rel="noreferrer noopener">a policy statement</a>, Tuesday, targeted squarely at the BoE, warning against “inaction bias, in view of costs associated with containing second-round impacts.”



Unemployment in the UK is expected to be 4% in November, down 0.5%, indicating the labor market remains tight.



<h3 class="wp-block-heading">ECB calls for “flexibility”</h3>



In the Eurozone, inflation surged to 4.9% in November, the highest level ever recorded, <a href="https://ec.europa.eu/eurostat/documents/2995521/11563387/2-30112021-AP-EN.pdf" target="_blank" rel="noreferrer noopener">according to Eurostat</a>.



At Thursday’s <a href="https://www.ecb.europa.eu/press/pressconf/2021/html/ecb.is211216~9abaace28e.en.html" target="_blank" rel="noreferrer noopener">European Central Bank (ECB) policy meeting</a> in Frankfurt, Germany, ECB President Christine Lagarde announced a scaling back of asset purchases under the pandemic emergency purchase program (PEPP), and its full discontinuance in March 2022.



<blockquote class="wp-block-quote">“We judge that the progress on economic recovery and towards our medium-term inflation target permits a step-by-step reduction in the pace of our asset purchases over the coming quarters. But monetary accommodation is still needed for inflation to stabilise at our two per cent inflation target over the medium term,” Lagarde said in her prepared remarks.</blockquote>



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>



The key ECB interest rates were left unchanged. Similar to the Fed’s policy, the ECB plans to wind down net asset purchases prior to raising rates.



Eurozone inflation is expected to remain elevated next year, but to decline over the course of the year, mirroring the outlook in both the UK and the US.



The US dollar weakened following the BoE and ECB announcements. The DXY, an index representing the USD against a basket of major foreign currencies, fell almost 0.5% in the two hours following the policy updates, but recovered by midday in New York.




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The ECB and Bank of England Grapple With Inflation

Sam Reynolds

<div id="highlights-block_6192e466f8324" class="highlights">
 <ul>
 <li>The relatively decentralized federalist system in the USA, which grants significant autonomy to the states, provides an inherently competitive system for market development, which in turn accelerates the adoption of crypto</li>
 <li>Compared to the US, inflation is much more tame in the UK, a macro factor which also inhibits the adoption of crypto</li>
 </ul>
 
</div>



Digital Asset Summit 2021, London — The UK is in the education phase of crypto adoption, where people are beginning to think of it as a legitimate asset class, but the structure of the nation’s government is holding back ambitious crypto entrepreneurs, panelists said during an event at Blockworks’ Digital Asset Summit in London. 



During a fireside chat between Peter McCormack, <a href="https://cms.blockworks.co/podcasts/what-bitcoin-did/" target="_blank" rel="noreferrer noopener">host of What Bitcoin Did</a>, and Oliver von Landsberg-Sadie, CEO of BCB Group, the two discussed how the US’ style of federalism and differences in macroeconomic factors is creating a gulf in crypto adoption between the two countries. 



“With the US federal system, states such as Wyoming, Florida and Texas have seen this as an opportunity to bring business into their states,” McCormack said, pointing out that many firms have migrated to these states. But, in the UK, the Bank of England’s position, according to McCormack, is that bitcoin is a “potential systemic risk.”



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="600" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg" alt="" class="wp-image-11215" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=600 600w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=80 80w" sizes="(max-width: 600px) 100vw, 600px" /><figcaption>Peter McCormack; Source: Ian Walton for Blockworks</figcaption></figure></div>



Brexit is also a weight on the industry in the UK, as banks need to focus on becoming re-licensed and compliant with EU rules and regulations. That’s a burden and inefficient, said the panelists, and also a missed opportunity argued McCormack, who would prefer to see the UK adopt crypto-friendly rules, to be a “leading beacon” for the world.



<blockquote class="wp-block-quote">“We are really behind the US here in ambition, investment, and education,” he said. “On every single measure we are behind, and it’s really depressing to see it,&#8221; said McCormack.</blockquote>



<h3 class="wp-block-heading">Macro differences driving adoption</h3>



BCB Group’s von Landsberg-Sadie pointed out that the differences in monetary policies between the US and UK, where money had been printed “far more freely”, is also accelerating crypto adoption on the western side of the Atlantic that doesn’t exist in the same way within the UK.&nbsp;



“The UK has been a little more steady handed in that space, as has the EU,” he said, arguing that if inflation jumps from 3.2% to 6.2% there will be significantly more capital accumulation in bitcoin.



<blockquote class="wp-block-quote">“The retail adoption of crypto in the US is an appropriate response to inflationary concerns.”</blockquote>



But that’s not to say there’s not a “massive appetite for non-US dollar crypto products,” von Landsberg-Sadie said.&nbsp;



As Bloomberg analyst <a href="https://cms.blockworks.co/bloomberg-analyst-bitcoin-is-a-dollar-complement/" target="_blank" rel="noreferrer noopener">Mike McGlone wrote in an April note</a>, crypto enhances the dollar’s dominance in the world because the vast majority of stablecoins are dollar-denominated.



However, to get to that point in the UK and Europe, there still needs to be a “massive catch-up”, von Landsberg-Sadie said.



There’s no lack of factors to drive change, however, as von Landsberg-Sadie explained that the next major capital event will be when there’s a UK-approved treasury management system that allows for the “super juicy returns from DeFi” to be brought into the TradFi world on corporate treasury balance sheets. 



But perhaps that is only possible if the UK can catch up in crypto adoption first.



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