Having cleared the field, UK aspires to become a global crypto hub

Days after concluding a months-long crackdown that saw hundreds of crypto companies pack their bags, the UK seeks to rebrand itself as a crypto hub.

Not a week has passed since the Financial Conduct Authority, the UK watchdog tasked with the enforcement of crypto regulations, finished assessing crypto companies that operated in the UK before December 2020.

Examining the crypto sector’s ability to comply with anti-money laundering and terrorist financing laws, the FCA pulled the plug on over 240 businesses. Full approval was granted to just 33.

In May 2021, the Economic Secretary to the Treasury, John Glen, described the crackdown as part of a process aimed at boosting “confidence in the UK as a safe and reputable place to start and grow a cryptoasset business”, but the sector was spooked by what amounted to a crypto exodus from the UK market.

A new chapter?

This week, UK authorities changed their tune. Chancellor of the Exchequer Rishi Sunak tweeted that the government was “working to make the UK a global cryptoassets hub”.

A statement issued by the Treasury announces a package of crypto-friendly measures, including a plan to recognize regulated stablecoins as a form of payment. In Treasury’s view, this will allow UK consumers to use crypto “reliably and safely”.

The statement adds that the government would form a Cryptoasset Engagement Group to foster a stronger cooperation with the industry, as well as creating a “financial market infrastructure (FMI) sandbox” to encourage businesses to “experiment and innovate”. The latter is supposed to be part of an effort to enable Distributed Ledger Technology for the UK financial market.

Other announced measures include a plan to commission the Royal Mint to create an NFT, expected as early as this summer, and making the UK tax system more crypto-friendly. What’s more, John Glen hinted at the possibility of adding crypto to the Investment Manager Exemption, the UK’s statutory concession system designed to attract non-resident investors.

CryptoSprint

At the same time, the FCA announced they would be hosting CryptoSprint, a two-day event for crypto professionals, academics, regulated financial institutions, advisers, and consumer bodies.

Participants will form teams to debate issues such as possible eligibility criteria for cryptoasset trading on UK-based exchanges, balancing risk with potential benefits, and gaps in the UK’s existing regulatory framework.

The FCA is accepting applications until April 20. The event will take place on May 10-11 in London.