As a seasoned crypto investor with over two decades of experience navigating the ever-changing landscape of financial markets, I find myself intrigued by the current state of cryptocurrency regulation in the UK and the European Union (EU).
Industry experts believe that the clarity around cryptocurrency regulations in the U.K. isn’t robust enough yet, making it questionable as a viable alternative for businesses looking to evade Europe‘s Markets in Crypto-Assets Regulation (MiCA).
Sophie Bowler, the chief compliance officer at UK-based Zodia Custody, anticipates that the demands of MiCA may cause a “temporary move” or shift towards the United Kingdom from the European Union.
According to Bowler’s statement in the Chainalysis’ 2024 Cryptocurrency Report, firms that cannot or choose not to comply with MiCA’s standards may temporarily move their operations to the UK market instead.
It’s possible that crypto firms could look for other markets before MiCA’s deadline in late 2024, but moving to the UK may not be a viable solution, suggests executives from CryptoUK, the self-regulatory trade association in the UK, and Merkle Science, a risk intelligence firm in the crypto space.
UK’s approach to crypto regulation introduces “unpredictability”
As per Natalia Latka, head of public policy and regulatory affairs at Merkle Science, the rigorous standards set by MiCA could create substantial hurdles for non-EU crypto asset service providers (CASP) and stablecoin issuers.
Latka pointed out to CryptoMoon that the high costs and intricacy of adhering to this regulatory system could make the European market less accessible, causing local businesses to ponder moving elsewhere, which might weaken the influence of European regulations on a global scale.
As a researcher examining the impact of MiCA on business operations, I ponder if the United Kingdom presents a suitable substitute for companies aiming to escape the heavy regulatory burden of the European Union’s crypto landscape.
She mentioned that although the UK might appear as an attractive, close option for businesses looking for respite, it comes with its own set of difficulties.
“The UK may not offer the regulatory certainty or operational ease that some expect compared to MiCAR, making it a less ideal alternative for crypto asset service providers seeking a predictable legal environment.”
Additionally, Latka expressed concern that the UK’s gradual approach to cryptocurrency regulation might bring about uncertainty. He specifically pointed out challenges such as the prolonged registration procedure required by the Financial Conduct Authority in the UK.
A jurisdiction with less clarity?
Su Carpenter, head of CryptoUK, made comments similar to Latka’s, pointing out that ongoing regulatory issues in the UK are a result of the delays following the general election and the change in government back in July.
In late 2023 and early 2024, the carpenter noted significant advancements in the UK regarding regulatory consultations. However, as we moved into subsequent phases of implementation, there has been no further progress.
According to Carpenter’s statement to CryptoMoon, it appears that the newly elected Labour government hasn’t provided a definite strategy or guideline regarding their stance on the digital assets industry yet.
“With the uncertainty as to how the regulatory framework in the UK will be implemented, we would be surprised to see organizations take a decision to move to a jurisdiction with less clarity — given the cost and resource it would require to do this on a short term basis.”
Regarding the regulatory approach to cryptocurrencies between the UK and the EU, Carpenter proposed that the UK’s strategy won’t copy MiCA (Markets in Crypto Assets) entirely because numerous aspects must adapt to accommodate the ongoing changes within the dynamic nature of the crypto sector.
She determined that Europe’s MiCA presents a genuine chance for the UK administration to capitalize on the possible move away from the EU by businesses in search of a friendlier regulatory climate.
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2024-10-23 17:27