The US is traditionally lacking in crypto regulation and although it may be strangling innovation, the UK is looking to lure companies who cannot adapt to these regulations.

In the past decade, the crypto space has emerged as a potential financial revolution, and lawmakers across the globe are trying to figure out the best way to regulate it. But some American lawmakers and businesses think the US is strangling innovation with its heavy-handed and oftentimes confusing approach to regulating crypto. However, the UK is hoping it won’t have to go that route – and thus, companies looking for relief seek solace in British blockchain technology and markets.

Nuanced Approach to Crypto Regulation: A16z and Polygon Labs Proposal

VC giant Andreessen Horowitz (a16z) recently requested the UK Treasury not to adopt the US’ heavy-handed approach to regulation, instead of focusing on a more “nuanced” approach. UK authorities had set out plans in February to regulate crypto exchanges like they do other traditional finance venues, and a16z Head of Policy Brian Quintenz said that the investment firm looked forward to continuing the work with the Treasury to build “world class rules which will protect consumers and allow this innovation to flourish.”

This proposed regulatory framework by the UK government combines existing financial asset laws with up-to-date crypto-specific rules. Polygon Labs, the driving force behind the Polygon blockchain network and the 10th largest cryptocurrency MATIC, submitted the response to the Treasury and generated suggestions to the Treasury, including a proposal where “unbacked crypto assets” — like Bitcoin — should be treated differently than coins and tokens which have a team behind them and a value attached to other assets.

UK’s Crypto Welcome Mat: Turbocharging Exchange Relief from US Regulatory Pressures

The US’s SEC Chair Gary Gensler has taken an aggressive approach to enforcing compliance from major crypto brands, causing a distant divide from the Republican politicians who feel tech is becoming displaced. Exchanges such as Kraken, Bittrex and Coinbase have all been leading the charge for alleged sales of unregistered securities, but with this enforcement attitude, only serves to further push these companies away in search for relief.

This is the welcome mat the UK has rolled out for crypto companies looking for reprieve from US regulatory pressures, even going as far as saying that the market has the potential to “turbocharge” its crypto sector. Prime Minister Rishi Sunak made it clear as he was finance minister that he was keen to make the UK a crypto hub, mirroring the moves made by Dubai, Singapore and even Hong Kong in recent years.

UK: A Web3 Innovation Hub for Blockchains

It appears the UK may just be the place for innovative blockchains and projects to come together to thrive within the industry. Coinbase CEO Brian Armstrong recently had a meeting with UK Economic Secretary and City Minister, Andrew Griffith to discuss the positive implications of UK legislation and the vision he laid out for the UK to become a Web3 innovation hub.

Coinbase’s Armstrong presented nine recommendations to the UK government in his speech at the London FinTech conference; including collaboration between the banking and FinTech sectors and developing regulatory frameworks that promote stablecoins and tax treatments for crypto assets. These were all elements Armstrong felt would “cement its place” as a Web3 hub, in-line with the vision from Prime Minister Sunak.

Fresh Air for Crypto Companies and Britcoin

The US regulations may, indeed, be strangling innovation, but the UK is now offering a breath of fresh air to crypto companies and the drive for the industry’s development. Crypto companies who may become displaced due to US regulatory pressures have a potential new home in the UK, one who may roll out its own central bank digital currency, Britcoin. The country is now in a “growth” mindset to maximize the economic efforts brought by tech innovation in the private sector and is looking to thrash out policy debates and address privacy and technology issues surrounding a digital pound.

The UK still has a little while to go in terms of their regulatory framework, and whether they will be successful in their bid to become a crypto hub remains to be seen. However, the country’s concrete steps toward a crypto-friendly landscape could well help secure crypto’s current and future success.

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The post UK Lures Crypto Companies with Lighter Regulations Amidst Strangling Innovation in the US appeared first on Boxmining.

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Filed under: Bitcoin - @ May 3, 2023 4:11 am