The Sunak government’s desire to attract cryptocurrency could give impetus to efforts to build a more inclusive regime for the industry. But it can also create competitive dynamics. Critics of the government’s approach say they fear that speeding up regulations and allowing the crypto industry too much room to maneuver could lead to decisions that expose consumers to problems. risk or ultimately undermine long-term efforts to prevent financial crime, such as money laundering and terrorism. finance.
The message lobbyists are “pouring into the ears” of politicians is money, said Martin Walker, director of banking and finance at the Center for Evidence-Based Management, a nonprofit organization. Electronics needs its own rules if the UK is to keep pace with financial innovation. management strategy enterprise. Walker, who gave evidence As part of a 2018 government crypto investigation, it says that “anxiety flexibility” for cryptocurrencies risks repeating previous boom and bust cycles in the sector. finance. “After the dotcom bubble that involved a lot of fraud and the 2007 financial crisis caused by bad financial innovation, it seems that the lessons have been completely forgotten,” he said.
The capital of the United Kingdom — derisively described as “Londongrad” or “Moscow-on-Thames” because of its willingness to accept money from Russia and other unruly states in the past — has had a bad reputation as venues for money laundering and other financial crimes, said Stephen Diehl, a crypto skeptic commentator.
Some in Sunak’s party also disagree with his vision for cryptocurrencies. In May, a report from the Treasury Select Committee, a cross-party parliamentary group, stated that cryptocurrencies serve “no useful social purpose” and expose consumers to fraud and scams. It also asserts that cryptocurrency trading should be regulated as a form of gambling, not a financial service, or run the risk of a “halo effect” that creates a false impression of security. whole.
To avoid glorifying cryptocurrencies, the FCA has previously adopted a cautious approach. “Given the extent of the damage, our stance has always been that it is a high-risk investment,” said Matthew Long, director of payments and digital assets at FCA. “We’ve made it clear that people should be prepared to lose money.”
Because the UK’s ability to attract crypto businesses to its shores depends on the duration of the final regulatory regime, there is concern that the FCA could come under political pressure to loosen its stance when developing a set of rules.
Sunak’s plan, McAteer said, imposes a secondary and potentially “very dangerous” goal: economic growth. It creates an opportunity for political interference, he said, as the FCA drafts rules for cryptocurrencies, when it should be free to prioritize the public interest.
As long as there are few concrete rules in the UK and political promises remain vague, that fear will remain amorphous and non-specific. For instance, it is unclear whether crypto companies will be able to meet softer reporting requirements or be allowed to offer riskier financial products, such as Cryptocurrency derivativesor be free to take a cut when it comes to storing customer cryptocurrencies. But McAteer suggests that the idea that third parties could interfere in the rule-making process is worrisome and regulators could find themselves under pressure if they make decisions to interfere. political agenda. The FCA will “be brought before select committees and the Treasury Department,” McAteer said, and “will be criticized if seen as hindering innovation.” The Treasury did not return a request for comment.
The FCA rejected the idea that the government or industry players could be allowed to do puppetry: “We are an independent regulator,” Long said. “Once our perimeter is established, we’ll do our job, which is to make the rules.”
But the ability of regulators to perform their protective function, McAteer said, depends on their ability to regulate industry requirements and stay out of political conspiracies. “It’s a really bad sign when there’s a combination of hype and government pressure,” he said. “That’s when it comes to making mistakes.”
