What do experts think of UK’s plans to become a ‘global cryptoasset hub’?

By Gaia Lamperti

Speaking at the Innovate Finance Global Summit (IFGS), the flagship event of UK FinTech Week, MP John Glen, the Economic Secretary to the Treasury, revealed that work is underway to turn the UK into a ‘global hub’ for the crypto industry.

The minister said that UK lawmakers see “enormous potential” in the industry and that they are working with regulators to bring stablecoin into the regulated space, along with the development of a further regulatory framework for digital assets. He revealed that the Chancellor has asked the Royal Mint to create an NFT to be issued this summer.

Setting out a new vision

Responding to the speech, Janine Hirt, CEO of Innovate Finance, said: “This was a landmark speech setting out a vision for the UK to be the leading hub for technology that will transform payments, capital markets infrastructure and ESG assurance. John Glen set out a comprehensive programme of work with regulators, a more flexible ‘beta testing’ approach to regulation, and updating the tax and legal basis for digital assets and DeFi.”

“At Innovate Finance we have been calling for a Government vision of the opportunity of digital assets and DLT. Today the Government did this and set out what we have also been calling for – a joined-up strategy with regulators, a sandbox approach to regulation and better industry engagement and a sense of pace. We now look forward to supporting industry collaboration with Government,” she added.

Many other firms in the sector that have long pushed the government to support crypto-asset adoption, would be welcoming the announcement with excitement, like in the case of the Payments Association, which is working on a series of pilots to test new use cases for the digital sterling, as told to IBSi. 

Expecting a ripple effect

About the news that Chancellor Rishi Sunak is to launch a non-fungible token (NFT) through the Royal Mint as part of the plan to make the UK a crypto hub, Mark Basa, Global Brand and Business Manager at $800m crypto company HOKK Finance, commented: “Honestly, I’m incredibly excited for the UK to do this. The country is extremely influential when it comes to certain fiscal policies, so I image this could have a ripple effect in the Commonwealth, where numerous nations follow suit and begin to rapid accept crypto, issue NFTs, and use stablecoins as a major use of commerce.”

“What is incredibly interesting is the UK Government’s take on DAOs. I feel that once the true mechanisms of a DAO are understood, there will be a boom in companies shifting towards this sort of governing for both private and public entities, where governance tokens are issued in lieu of common stock.”

“Also strikingly positive is how the UK Government will look into DeFi loans. A major hurdle in crypto adoption will come down to how the mortgage market shifts towards decentralized finance, opening a plethora of opportunities for new and existing businesses to offer their customers loans on the blockchain. Depending on how the legislation is worded, I imagine that centralised banks will try to secure their place in DeFi, whereas decentralized platforms will continue to dominate until either cracks the code on how to get the average joe (retail investor) to adopt their lending protocol,” Basa concluded.

A change in narrative

Lavan Thasarathakumar, Director of Regulatory Affairs – EMEA, at Global Digital Finance, the global cryptoassets and digital finance industry membership body, said: “We are hoping that the EST’s comments on dynamic regulation ring true here and the agility afforded to UK’s financial services regulation through the Future Regulatory Framework allows for the efficacy of this approach to be reviewed. The EST proposes that this will be a world-leading regime for the rest of the crypto market. This is a significant and ambitious proposal. If this is as good as it sounds, the UK could be delivering a comprehensive framework that covers all cryptoassets and gives regulatory clarity to the industry in the UK.”

Thasarathakumar continued:  “The UK is well primed to lead in this area and it is imperative that, where necessary, legislation is amended or enacted quickly in order to build the infrastructure needed to deliver this new financial ecosystem. It is a long-awaited announcement from the EST, and certainly feels like a change in narrative.”