The UK is facing significant criticism for its regulatory policy on digital assets, with market participants highlighting 'policy procrastination' as a key reason for its lag behind the EU and US.
Uncertainty in Regulation
In a blog published on June 20, John Orchard and Lewis McLellan from the Official Monetary and Financial Institutions Forum (OMFIF) noted that the UK has wasted its early mover advantage in distributed ledger finance. They stated that the country continues to 'talk vaguely about future regulation'. 'As it stands, there is a conspicuous absence of a start date for the 'go-live' portion of the Financial Conduct Authority's 'Crypto Roadmap,' they wrote.
Comparison with EU and US
The European Union has already implemented its Markets in Crypto-Assets (MiCA) framework, while the US Senate recently passed the Stablecoins Act. As regulators in other countries act, the UK faces challenges in establishing a clear and workable regulatory approach for crypto assets.
Issues with Stablecoins
Criticism also falls on the UK's approach to stablecoins. Unlike the US, which treats stablecoins as distinct payment tools under its Stablecoins Act, UK regulators have lumped them in with crypto investment assets, which has puzzled the market. The Bank of England's initial stance required systemic stablecoins to be fully backed by central bank money, a condition that many market players deemed economically unviable.
In conclusion, while the UK once led fintech innovation, its position on digital asset regulation is becoming less secure due to a lack of clarity and working frameworks. Regulators must act swiftly to maintain the country's competitiveness on the global stage.
