Crypto’s Future: Is it Really on the Horizon?
Britain’s previous attempt to establish itself as a crypto hub was a failure, but now the UK government is taking another shot at it. At the Innovate Finance conference, Minister Bim Afolami emphasized the government’s commitment to creating a regulatory environment that encourages innovation while protecting consumers. Plans are underway to introduce legislation focused on stablecoins and staking, with the goal of finalizing it by the summer.
The Conservative government’s previous efforts in the crypto space didn’t go as planned. Two years ago, they announced plans to launch an official non-fungible token (NFT) in collaboration with the Royal Mint, but this initiative was quietly abandoned due to opposition from rival politicians who believed there were more pressing issues to address. However, progress has been made in providing clearer regulations for crypto firms. In June 2023, a Financial Services and Markets Bill was approved, allowing for the safe adoption of digital assets by British consumers.
The UK’s Financial Conduct Authority reported that as of August 2022, around 9% of adults in the country, equivalent to five million people, owned cryptocurrencies. This number is expected to have increased even further as the crypto markets recover. Additionally, attracting investment following Brexit is a key motivation for the Conservatives and Prime Minister Rishi Sunak, as major crypto firms have grown frustrated with regulatory uncertainty in the US.
Bivu Das, Kraken’s UK managing director, believes that well-crafted legislation will provide much-needed clarity for crypto exchanges. He emphasizes the importance of balancing innovation with consumer protection and expresses optimism despite the challenges of regulating decentralized assets.
While Minister Afolami expressed confidence at the conference, there is no guarantee that the government’s crypto legislation will come to fruition. The UK must hold a general election by January 2025, and the Conservative party is currently facing controversies and scandals that have left them behind in the opinion polls. Prime Minister Sunak has not revealed when the election will be held, hoping for an improvement in the economy and alleviation of the cost-of-living crisis.
The Labour party, projected to win the next election, may not be as crypto-friendly as the Conservatives. Their plan for financial services does not mention crypto but focuses on making the UK a global hub for tokenization and developing a central bank digital currency instead.
As for the development of a digital pound or “Britcoin,” progress has been slow, with the Bank of England still undecided on whether to create a central bank digital currency due to concerns about privacy.
With the Prime Minister’s position weakened and a new leader likely on the horizon, there is uncertainty surrounding the government’s vision of a crypto hub in the near future.
