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Yet Another Cryptocurrency Initiative By UK’s National Crime Agency

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The United Kingdom’s next prime minister is Rishi Sunak. Sunak supports bitcoin and wants to turn the UK into a major center for it. In the midst of this, UK MPs have decided to accept cryptocurrencies as regulated goods and financial instruments.

Recently, the UK’s HM Revenue and Customs [HMRC] Department published a series of laws to define “designated crypto assets.” The Investment Manager Exemption is applicable to transactions involving these assets filed starting with the tax year 2022–2023 in the UK. On January 1st, 2023, the same was supposed to take effect.

New Cryptocurrency Unit Created By Crime Agency

After a year in which $3 billion in cryptocurrency was stolen through hacks worldwide, the UK’s National Crime Agency is hiring a team of law enforcement officials to look into cryptocurrency crimes.

According to a job posting on the government website, originally seen by Financial News, investigators “shall be dedicated to a proactive cryptocurrency remit with the relevant tools and capacities to target UK-based suspects” as members of the national cybercrime section “crypto cell.”

The Financial Conduct Authority discovered that between March 2021 and April 2022, financial fraud alerts in the UK were most prevalent in the cryptocurrency sector. During that time, the agency opened 432 cases to investigate schemes involving cryptocurrencies.

According to an annual enforcement review released by the Financial Conduct Authority, there were 8,568 alleged crypto scams reported to the organization between April 1, 2021, and March 31, 2022. That represents a roughly 36% increase from the same period the previous year. This number tops the board and is more than twice as high as the second-place fraud category of pension transfer to a new scheme.

The FCA’s “ScamSmart” campaign, which also contains a warning to consumers about the dangers of investing in cryptocurrencies, includes the data release. In its annual public review meeting earlier in October, the FCA reaffirmed the project’s significance and warned cryptocurrency investors that they may “lose all their money.”

Cryptocurrency Leash Tightening In UK? Here’s What Ashley Alder Has To Say

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Governments from all over the world are taking the initiative to regulate the cryptocurrency industry. Undoubtedly, the market has become exceedingly unstable as a result of the consecutive failures of crypto businesses this year. Regulators have voluntarily intervened as a result of clients losing billions. For instance, Australia’s crypto rules will probably get stricter in 2023.

Now, it appears that the UK may do the same. In a recent Financial Times article, Ashley Alder, the incoming chair of the Financial Conduct Authority, noted that when the agency obtains expanded regulatory authority over the industry, crypto firms intending to establish enterprises in the UK will face an uphill battle.

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Ashley Ian Alder, Chief Executive Officer of the Securities and Futures Commission

He stated,

“I think it [crypto] should be regulated further.”

Money Laundering Easier With Cryptocurrency Firms

Alder noted that in his opinion, cryptocurrency platforms were “deliberately elusive,” encouraged money laundering on a large scale, and produced “massively unfavorable risk” while speaking at a cross-party Treasury Select Committee.

Alder, the current Chief Executive of the Securities & Futures Commission in Hong Kong, further explained,

“Our experience to date of [crypto] platforms, whether FTX or others, is that they are deliberately evasive, they are a method by which money laundering happens in size.”

The way businesses in the sector “package a whole set of activities which are generally isolated… gives rise to substantially unfavorable risk,” he continued, including the possibility of conflicts of interest and improper asset management.

The FCA has struggled with its current burden, on the other hand. It is currently in the middle of a transformation program. MPs questioned Alder on why only a third of people trusted the FCA’s leadership. Alder responded,

“You could only hope that would improve.”

The new Chair also admitted that there were “perennial doubts about operational efficiency” and a view that the FCA had not “secured appropriate protection for consumers.” Alder declared that he intended to relocate to the UK in January. Notably, the following month, he will take over as FCA Chair.

The UK has stated that it will extend tax benefits for investment managers to cover crypto assets, therefore it is important to keep this in mind. The U.K. should function as a major worldwide hub for cryptocurrency, according to Prime Minister Rishi Sunak. The Treasury declared it will expand its current tax relief to the cryptocurrency sector.

The UK will provide tax benefits for investment managers that use cryptocurrency

The FCA, however, chose not to address whether or not its incoming Chair’s opinions differed from those of the administration.

Cryptocurrency Now Recognized As Regulated Financial Instruments And Goods: UK Lawmakers

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The United Kingdom’s newest prime minister, Rishi Sunak, is a huge crypto enthusiast. As Sunak supports cryptocurrency it has been made clear that he wants to turn the UK into a major center for it. In the midst of this, UK Lawmakers have decided to accept cryptocurrencies as regulated goods and financial instruments.

The inclusion of stablecoins in the draft report was approved by the House of Commons as well. The UK’s parliament has decided to publish new stablecoin regulations on Thursday. In a few weeks, the UK government also intends to hold a discussion on cryptocurrency regulations and the digital pound.

Global Cryptocurrency Usage Soars

The use of cryptocurrencies is expanding globally. The required regulations are being introduced by governments all around the world. The focus of governments is likewise shifting to stablecoins. This is because they are less volatile and pegged to either the value of the US dollar or the pound.

Recently appointed Economic Secretary to the Treasury Andrew Griffith claimed that specific cryptocurrency assets and distributed ledger technologies could bring about seismic shifts in the financial sector. The financial security of the users is also at risk, he added.

Griffith further stated,

“We wish to tentatively seize those opportunities … not fall behind other markets, but also proceeded in a cautious way. The government’s position is to start with those most stable, least volatile coins likely to be used by intermediaries as a settlement currency and then we will go forward and consult from there.”

Griffith further stated that to implement the framework and weigh its risks and benefits, the Treasury will communicate with numerous stakeholders and business leaders. As of right now, the House of Lords must give the regulations its final approval. This is necessary since King Charles III of England holds the ultimate authority.

Griffith also brought up the potential for a digital pound to be issued. In the following weeks, this issuance will also be the subject of consultations between the Treasury and the Bank of England.

The new crypto regulation bill received a unanimous vote of support from the committee’s legislators. It seems as though the House of Lords must currently approve the rules.

UK Lawmakers Begin Probe On The Crypto Sector

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The UK government’s “Crypto and Digital Assets All Party Parliamentary Group” [APPG] has begun an inquiry into the nation’s crypto industry in order to prepare a report and recommendations to share with the government.

As per a press release, the APPG revealed that the probe will focus on issues relating to the crypto and digital assets ecosystem in the country, and will have written findings accepted by Sept. 5, this year.

The group consists of MPs and lords from the main political parties and acts as a forum for policymakers and the UK‘s crypto sector in discussing the industry. 

The group will also take into account the views of crypto operators, regulators, industry experts, and the government on the role of regulation, CBDCs, consumer protection, and economic crime. It also intends to hold several evidence sessions in the upcoming months. 

MP Lisa Cameron, who heads the APPG, stated, “It’s vital that the UK does not take its foot off the gas and that government and regulators keep to their commitments when it comes to crypto and digital assets.”

The country has seen major political changes in recent times, such as the resignation of Treasury Minister John Glen, whose April speech supporting the industry gained a lot of attention from a UK official to date.

UK’s Mixed Signal Is Hampering The Growth Of The Crypto Industry

Glen has been vocal about the need for a regulated framework that will essentially focus on fostering the growth of the sector. However, the same cannot be said for other UK institutions, which have, time and again, raised concerns regarding the safety and viability of crypto-assets.

Bank of England Governor Andrew Bailey, for instance, called criticized the crypto market and called it an “opportunity for the downright criminal.”

It’s precisely this sort of mixed messaging that could hinder the industry’s development.

The crypto market holds roughly a $1 trillion market cap and the flip flop within the political circles could act as a roadblock to the industry’s development.

That said, the U.K. is one of Europe’s leading fintech hubs and is fortunate to be equipped with the infrastructure, investment, and talent to drive the crypto industry. But in order to maintain this position, it needs to take a decisive and unilateral stance on cryptocurrency.

UK Double Down On Stablecoin Regulations Fearing “Knock-On Effects” of Terra’s Collapse

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UK government has outlined amending current rules to mitigate “systemic” risk posed by stablecoins firms and wants to ensure that the dramatic fallout of the Terra project does not seep into the wider financial system.

TerraUSD, a so-called “algorithmic” stablecoin, crashed earlier in May, taking its sister token Luna with it. Since then the entire crypto market is engulfed in panic, erasing hundreds of billions of dollars from it.

Even Tether, the world’s biggest stablecoin, saw its circulating supply plunge from a record $84 billion on May 11, fueling fears of a 2008-style “bank run” with knock-on effects for other financial markets.

That has, in turn, caused concern for regulators, who are worried about the risks posed by stablecoins to the broader financial system. 

It is to be noted that the latest plan is different from previously announced plans to regulate stablecoins under laws governing electronic payments. The government said in a consultation paper setting out its proposals.

“Since the initial commitment to regulate certain types of stablecoins, events in crypto-asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity, and financial stability risks.”

“The government considers that it is important to ensure existing legal frameworks can be effectively applied to manage the risks posed by the possible failure of systemic DSA [digital settlement asset] firms for the purposes of financial stability.”

UK’s Bank of England Will Be Given More Power

In addition to that, the UK authorities are working to implement additional safeguards to existing legislation around the insolvency of firms operating key financial market infrastructure. Such a provision would take into account the return or transfer of the private keys that protect users’ funds.

The Bank of England would serve as the lead regulator enforcing the rules. A consultation on the proposal is currently in progress and will close on Aug. 2.

Not only in the UK but Regulators around the world are also working towards bringing effective regulatory controls. Recently Chinese state media outlet, the Economic Daily, has signaled that the Chinese government may introduce even tighter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem. 

UK Eyes Stablecoin Regulation Amidst Terra Chaos

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The UK Treasury has declared that it is open to stablecoin regulation for payment purposes but that algorithmic stablecoins would be excluded due to their lack of stability. Only stablecoins backed by fiat currencies will be considered. This comment is in line with the queen’s son Prince Charles’ Tuesday speech, which included fiscal issues.

The Government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets. We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required.

A spokesperson from the Exchequer

The Queen also addressed the growing cost of living that many Britons are facing as a result of the pandemic, with inflation approaching 10% and energy prices rising.

UK government has been cautious with the decision

Chancellor of the Exchequer Rishi Sunak suggested stablecoins and central-bank digital currencies might enhance payment processing networks in a speech on November 9, 2020.

If the UK government changes current electronic money legislation to meet stablecoins, the Financial Conduct Authority will regulate them.

So far, the watchdog has stayed cautious by allowing just a small number of bitcoin businesses to open shop in the UK, forcing other businesses with insufficient AML checks to operate abroad. Last month, the Treasury’s economic secretary remarked, “The UK is open for business and opens for crypto trade.”

“The UK financial services business must always be at the forefront of technology and innovation,” Sunak says. To represent the UK government’s forward-thinking position on the crypto business earlier this year, Sunak commissioned the Royal Mint to create a non-fungible token (NFT) before summer 2022.

The untimely tragedy of the Terra and LUNA algorithmic stablecoins has cast a pall on what was once thought to be a secure haven for cryptocurrency investors.

Senator Pat Toomey of Pennsylvania has called on the federal government to regulate stablecoins in the wake of Terra’s “bank run,” which depleted the company’s liquidity reserves and sent shockwaves across the crypto market with significant selloffs.

UK Financial Regulator Provides Temporary License for 5 Crypto Firms

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The Financial Conduct Authority (FCA), the UK’s leading financial regulator, has granted five crypto businesses interim registration to continue operating in the country.

The deadline for crypto companies to register with the FCA passed last week, but the applications of these five companies are still waiting.

On Thursday, the Financial Conduct Authority (FCA) in the United Kingdom revised its list of crypto-asset businesses with provisional registration. Cex.io Ltd., Copper Technologies (UK) Ltd., Global block Ltd., Revolut Ltd., and Moneybrain Ltd. are now among the five companies on the list.

At the end of March, the British financial regulator said that it had delayed the registration date for some crypto companies to fulfill its regulatory criteria.

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UK Financial Regulator Provides Temporary License for 5 Crypto Firms 3

There were 12 businesses on the temporary registration list at the time. Companies that do not appear on the most recent list will be unable to function after April 1.

In total, the financial regulator has registered 33 companies. “We have been evaluating crypto-asset businesses’ applications to ensure they fulfill the minimal criteria,” a spokeswoman for the FCA recently stated.

“We expect that persons who manage these firms are fit and proper and that they have effective mechanisms to identify and prevent money flows from criminality.”

Will the UK be a global crypto hub?

The government of the United Kingdom published a detailed strategy last week to turn the country into a worldwide crypto powerhouse and a “hospitable place for crypto.”

The government has opted to regulate stablecoins as part of the plan. The chancellor of the exchequer, Rishi Sunak, has ordered the Royal Mint to establish a non-fungible token (NFT) before the summer.

“It is my desire to make the United Kingdom a worldwide powerhouse for crypto-asset technology,” Sunak said, “and the policies we’ve detailed today will assist to guarantee that enterprises can invest, innovate, and scale up in this nation.”

The government also stated that it would look at various methods to make the UK’s tax structure more flexible in order to enable the crypto markets to thrive.

A country that appreciates crypto and the underlying technology is far superior to one that is attempting to eliminate the crypto business, such as India.

UK on a quest for crypto domination; Unveils plans to mint its own NFT

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The UK government is laying the groundwork for world domination in the crypto realm. On the 4th of April, Britain announced plans to mint its own non-fungible token, in its quest of becoming a “world leader” in the cryptocurrency industry.

This was divulged by City Minister John Glen at a recent fintech event. He said Royal Mint, the government-owned treasury that produces coins for the UK has been directed by Finance Minister Rishi Sunak to create and issue the NFT before summer. “There will be more details available very soon,” he added.

As stated by Glen, the UK’s NFT initiative is part of a larger effort by the government to “lead the way” in crypto. The minister announced a number of steps the nation will take to incorporate digital assets under more regulatory scrutiny.

“We shouldn’t be thinking of regulation as a static, rigid thing. Instead, we should be thinking in terms of regulatory ‘code’ like computer code which we refine and rewrite when we need to.”

Glen said the government was also on the lookout for other aspects of crypto, such as Web3.

Is the UK government’s crypto ambition a mere PR play?

The tall claims however failed to impress some. One of them is Mauricio Magaldi, global strategy director for crypto at 11:FS, who called the government’s NFT plans “nothing more than a strategic PR-play”.

The skepticism is not limited to a few. In fact, several industry insiders have been critical of the U.K.’s position on crypto and called for more regulatory clarity in the space.

In a previous article by TronWeekly, Britain’s top financial institution, the Bank of England [BoE] has taken a conservative approach to digital assets, despite authorities announcing plans to regulate the crypto market.

Similarly, the Financial Conduct Authority [FCA] reportedly refused to engage with a vast majority of crypto firms that have applied for registration with the watchdog. FCA, in its response, claimed that it feared too many “financial crime red flags” were overlooked. As a result, crypto firms have been forced to shut down their U.K. operations and move offshore after failing to make it onto the final register.

UK inches closer to a new crypto regulatory regime

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The UK administration will soon disclose its plan on regulating the cryptocurrency market, primarily focusing on stablecoins, according to industry sources close to the matter. More details of the plan will be revealed in due course of time, it added.

Sources interviewed by CNBC sought to dispel fear by saying that regulation favorable to the industry is being finalized which would provide the much-needed legal clarity for the sector.

They also told that Treasury officials have shown readiness to understand the intricacies of the crypto market, stablecoins, and other digital assets that derive their value from existing currencies like the U.S. dollar.

Further, the British Minister of Finance Rishi Sunak would be making an announcement within a few weeks about a new regulatory regime for crypto. Sources told CNBC requesting anonymity as the information is still under wrap.

Britain's Chancellor of the Exchequer Rishi Sunak leaves the 11 Downing Street, in London, on March 23, 2022.

As per the report, the department is in touch with a number of firms and trade groups including the Winklevoss brothers’ led crypto exchange Gemini. As a matter of fact, Gemini has its own stablecoin called the Gemini Dollar, which is pegged to the U.S. currency.

Despite lawmakers’ optimistic outlook, UK regulators have their own share of concerns with regard to crypto.

UK’s top bank calls for limiting risks arising from crypto

Last week, the UK’s central bank – The Bank of England [BoE] urged policymakers to expand regulatory frameworks to limit the risks posed by crypto to financial stability. BoE’s Deputy Governor Sam Woods wrote a letter to several bank CEOs saying there has been “increased interest” from banks and investment firms in “entering various crypto markets.”

Apart from that, there have also been concerns about digital assets being used to evade financial sanctions imposed on Russia since its invasion of Ukraine.

While digital assets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behavior underscores the importance of ensuring innovation in crypto assets is accompanied by effective public policy frameworks to maintain broader trust and integrity in the financial system,” the BoE’s Financial Policy Committee said in a statement released on 24th March.

UK watchdogs tighten noose on crypto ads

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Over 50 companies that have marketed cryptocurrency services in the United Kingdom (UK) have received an enforcement notice from the Advertising Standards Authority (ASA), instructing them to assess their adverts to ensure they comply with new instructions.

The companies mentioned are the ones that appear to have pushed cryptocurrency ahead of a planned crackdown in the country on deceptive and irresponsible crypto advertisements, according to reports.

The UK Advertising Standards Authority Issues A Red Alert About Cryptocurrencies

The notice, according to the Advertising Standards Authority, is intended to act as a caution to firms to examine and tidy up their adverts over the following two months, after which more stringent measures to punish rule-breakers would be implemented.

Crypto advertisements, that have risen as digital assets along with gaining widespread appeal, have been targeted by regulators around the world. Earlier this year, governments and watchdogs in the UK, Singapore, and Spain pledged to stiffen regulations on crypto advertisements. These rigorous guidelines also limit such promotions to just rich investors, though the United Kingdom has yet to establish a deadline for enacting that reform into law.

Guidelines of UK’s advertisement enforcement notice

All promotions should clearly and prominently state that cryptoassets are unregulated in the United Kingdom, that any profits may be subject to Capital Gains Tax, and that the value of crypto investments can go down as well as up, according to the ASA’s enforcement notice, which was issued on Tuesday. Advertisements in newspapers and magazines, on television, in emails, on outdoor posters, in boosted social media postings, and through paid agreements with influencers are all inclusive of this.

The ASA said that all commercials airing between now and May 2 will be checked for compliance, with “targeted enforcement action” taken if problems remain after that date. Furthermore, repeat offenders will be reported to the Financial Conduct Authority as well as Trading Standards, which has the authority to prosecute, penalise, and eventually stop businesses from trading.

The ASA refused to name any of the companies that got the enforcement notice but alluded to recent ASA judgments against crypto ad companies in the United Kingdom. Coinbase Europe Ltd, Arsenal Football Club, eToro’s UK subsidiary, and Floki Ltd., which launched adverts in favour of the parody cryptocurrency Floki Inu, are among the companies involved.