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The UK as a Global Crypto Hub

TLDR: We are fast approaching the one-year anniversary of the UK Government’s ambition to make the UK a crypto hub. The ongoing consultation from HM Treasury, the government's economic and finance ministry, shows that they are delivering on this commitment and recognise that digital assets and crypto will be a central pillar to future-proofing the competitiveness of the UK’s financial centres.

By Tom Duff Gordon, Daniel Seifert

Company

, March 15, 2023

, 4min read time

Coinbase

The UK has an impressive innovation infrastructure, including world-class research universities and levels of investment in FinTech only exceeded by the US. This has contributed to the UK’s success in incubating and hosting some of Europe’s largest tech players. In a nod to the need to lean into cutting-edge technology to retain this leading position, the UK Government is now consulting on crypto asset regulation, with the Future financial services regulatory regime for cryptoassets’ consultation. This framework will provide regulatory clarity and help drive innovation, with consumer protection at the heart of it

As the macro-economic outlook has shifted around us over the past year, the UK has been working steadily to develop the digital assets space. John Glen, former Economic Secretary to the Treasury, stated in April 2022: “We want this country to be a global hub - the very best place in the world to start and scale crypto-companies. If there is one message I want you to leave here today with, it is that the UK is open for business - open for crypto businesses.” Less than 9 months later, his successor, Andrew Griffith, published proposals for cryptoasset regulation stating that the UK government remained "steadfast in our commitment to grow the economy and enable technological change and innovation - and this includes cryptoasset technology". 

It’s clear that the UK government has identified an opportunity to benefit from being at the forefront of this rapidly maturing industry, looking to implement forward-thinking policy changes that would cement its position as one of the world’s premier financial centers.

At Coinbase, we are encouraged by the long-term thinking and forward-looking stance the UK Government has taken. Below are the key principles we believe must be adhered to in order for the UK’s ‘Global Britain’ ambitions to be realised:

  • Prioritise a cross-Government blockchain and Web3 strategy as a plan for growth. This will help capitalise on the next wave of tech innovation and digitisation of the economy.

  • Deliver a strategy for the City’s ongoing leadership by putting digital assets at its heart. Digitisation was central to driving the growth of the City in the 1980s. Big Bang 2.0 requires the same technological catalyst.

  • Move fast to deliver regulatory guardrails for the sector. The process is well under way, but other jurisdictions are making significant headway in delivering regulatory certainty to their markets. There is an opportunity for the UK to fast follow MiCA, taking the best provisions and improving others.

  • Ensure the UK banking sector supports responsible crypto asset innovation. Some UK retail banks are imposing blanket limits on crypto asset transactions to limit their own liability for fraudulent activity. This is the case even for transactions with regulated firms, such as Coinbase, and has the potential to be anti-competitive, disproportionate and discriminatory.

These principles will be at the heart of our consultation response to the Treasury which we will be submitting next month.

The UK is well-placed to become the first truly welcoming global financial centre for the next digital and financial revolution. A smart regulatory approach to cryptoassets that protects consumers while fostering innovation would put the UK ahead of other jurisdictions. There’s the opportunity here to make this happen, and at Coinbase we’re committed to working closely with policymakers and the wider industry to make this a reality.

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