The UK will never play host to a race to the bottom for Crypto
Union Jack on a 3D rendering of a bitcoin cryptocurrency coin (Credit: Ink Drop / Alamy Stock Photo)
3 min read
The United Kingdom’s crypto and digital asset sector has the potential to transform our financial services industry.
We have seen a surge in retail and institutional adoption of digital assets, both here in the UK and around the world. According to the latest data 2.3 million UK adults now own some form of cryptocurrency, with more people now seeing them as an alternative to mainstream investments.
We are also seeing more and more big brands wade into the crypto market, with companies like Gucci and Google announcing they will be beginning to accept cryptocurrency as a means of payment, and major payment firms like Visa, Mastercard and PayPal in the last few weeks now all looking at the potential of crypto.
The UK has a rich legacy and strong track record as a leader in financial services and fintech, and earlier this year the government said that it wants the UK to be a global hub for crypto investment. This was a landmark announcement by the government, saying it wanted to embrace this emerging and fast growing industry and to attract crypto firms to the UK.
We have some fantastic examples of innovative crypto and digital asset companies in the UK – not just in London, but across the country – creating jobs and development opportunities for people in highly skilled roles. These businesses, along with many others, are creating jobs across the country and attracting some of the brightest talent with highly skilled roles.
The Russian invasion of Ukraine demonstrated the potential of crypto as a force for good after the Ukraine government received millions in cryptocurrency donations to support its military and humanitarian efforts. Cryptocurrencies have been used to support Ukrainians to buy crucial goods and services when there is no cash in ATMs and critical infrastructure has been damaged by Russia’s attacks. Concerned friends and family abroad can send money to their loved ones across borders using cryptocurrency.
The potential opportunities are vast but we must also remain focused on the potential challenges when we look towards developing an appropriate regulatory framework for crypto.
There is a balance to be struck in terms of our approach to regulation. Firstly our regulatory regime must keep pace with the rapid advancements in technology and crypto. Secondly, we must ensure that we have high standards of consumer protection and financial education so customers know the potential risks. Finally, we need to ensure regulation is thought through and proportionate so we don’t inadvertently stifle innovation and growth in the sector.
I want to see the UK leading the way in crypto regulation and to shape its own regulatory approach to cryptoassets, which attracts inward investment, supports growth in the sector and champions high standards of consumer protection.
The collapse of the major crypto exchange FTX in recent weeks has done a great deal of reputational damage for the crypto industry and the industry will need to double down on protection for investors and consumers. The industry will also need to work more closely with regulators to ensure there is confidence in the system in the UK.
I do still see tremendous enthusiasm for the vision for the UK to become a global hub for crypto investment, but the UK will never be a race to the bottom in terms of standards and compliance. We want a robust system which is bespoke and makes the UK competitive.
With more and more people using crypto it’s more important than ever that we learn the lessons from this case and previous market failures to protect against harm to investors and consumers.
Dr Lisa Cameron MP is chair of the Crypto and Digital Assets APPG
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