Can Britain compete with America as a global crypto hub?

LONDON – Britain is making a new attempt to become a global crypto hub but faces a difficult path amid criticism from local entrepreneurs and U.S. competition under President-elect Donald Trump.

The UK Labor government has committed to making the country a conducive environment for companies engaged in crypto and blockchain-related activities.

In a recent speech, Britain’s Business Secretary to the Treasury, Tulip Siddiq, said the government wants companies to draft regulatory provisions for digital assets including stablecoins – tokens pegged to the value of government currencies – “as early as possible next year.” include.

She also said the government would not consider crypto staking services that offer rewards on users’ token holdings as collective investment schemes. Crypto industry insiders had feared that such treatment would bring onerous regulatory requirements.

“This is a sector with huge potential and a sector that already plays a central role in the UK’s dynamic technology landscape,” Poppy Gustafsson, the UK’s investment minister, said at a UK department event last week Coinbase-supported advocacy group Stand With Crypto.

Gustafsson said the government is “committed to the promotion and adoption of blockchain” and is “already taking decisive steps to support this sector and ensure we remain at the forefront of this global innovation.”

As an example, she cited the introduction of the Digital Securities Sandbox, a test bed for the development of new solutions based on distributed ledger technology for the issuance, trading and settlement of securities in a real regulated environment.

Another example is the “Digital Gilt” pilot launched last month, which aims to issue British government bonds on the blockchain.

While the UK is pushing ahead with a number of cryptocurrency regulatory proposals, not everyone is convinced that it can become a globally significant place for the technology.

“I don’t know if we have the policymakers, the government, the risk appetite and the business-friendly mindset to really take advantage of this generational opportunity,” said Steven Bartlett, a British entrepreneur who promotes his podcast series “Diary of a CEO said in a fireside discussion at the Stand with Crypto event.

Bartlett said being in the San Francisco and London offices of his blockchain startup Thirdweb made him think, “It’s really unfair to build a company here compared to being there.”

Data from the UK’s Financial Conduct Authority suggests demand for crypto products is growing in the country – the average value of crypto held by Brits rose to £1,842 ($2.33).7) this year, up from £1,595 a year ago, according to a survey published by the regulator last month.

The FCA also published a roadmap detailing its plan to implement regulation for the crypto industry. The regulator will publish discussion papers on stablecoins, trading platforms, lending and staking over the next two years. A full regulatory system is expected to come into force by 2026.

Tom Duff Gordon, vice president of international policy at Coinbase, told CNBC that the UK should not allow regulatory momentum in the crypto space to wane following Trump’s election victory.

The Republican politician ran on a notoriously pro-crypto policy platform, promising that he would not sell the bitcoins seized by the federal government and that he would replace acting Securities and Exchange Commission Chairman Gary Gensler, who has taken an aggressive enforcement approach against various crypto firms while he ran the agency.

Last month, Gensler announced that he planned to step down as SEC chairman on Jan. 20, the date of Trump’s upcoming inauguration.

“The UK has done a lot of work,” Coinbase’s Gordon told CNBC in an interview on the sidelines of the event. “There is a great opportunity for the UK to be really successful in this area, but we need clear regulatory clarity.”

“We would like to see secondary legislation on staking and stablecoins,” Gordon added. “The city minister has pointed this out – so we hope we see that too.”

While the UK now has a regulatory plan in place, crypto industry executives fear that waiting until 2026 to introduce comprehensive regulation could put the country behind its transatlantic rivals.

Coinbase Chief Policy Officer Faryar Shirzad said in a recent interview with CNBC that he now sees the US on track to pass federal crypto legislation “fairly quickly” – possibly as early as 2025.

Meanwhile, in the EU, a comprehensive law, the so-called Markets in Crypto-Assets (MiCA) Regulation, is due to come into full force this month.

George McDonaugh, CEO of KR1, a publicly traded digital asset investment firm specializing in blockchain technology, said outdated rules in the UK are making it difficult for crypto-focused investment firms like himself to become household listed names.

KR1 is currently listed on the Acquis Stock Exchange, a trading venue for high-growth companies.

McDonaugh said that KR1 has been trying to trade on the London Stock Exchange’s main market for years, but that this is blocked by a 2018 rule that bans trading in such tokens Bitcoin And ether be registered in publicly listed vehicles.

“Time moved on from there,” McDonaugh said. “We believe that by lifting this restriction we can unleash a tsunami of capital into the UK markets.”

As the FCA tries to figure out how to develop and implement a crypto regulatory framework, experts hope it encourages and encourages innovation – not stifles it.

Irfan Baluch, crypto lawyer at Cripps, said he hopes the UK takes inspiration from the EU, which has already taken a “leading position” in crypto regulation with MiCA.

“Application 20^Th “The transition from the law of the century to the technology of the 21st century… will only stifle innovation and drive crypto companies offshore,” Baluch said, adding that the FCA’s roadmap for crypto regulation “points in the direction to go.” “seems to be a solution to this problem” – at least for now.

“The UK has an incredible opportunity at this moment to take really decisive action… towards innovation,” Bartlett said.

“If we do this in a way that the United States seems to do as a matter of course, we will not be the residual beneficiary of blockchain or AI technology – we can play a really significant role in ensuring that the value of these technologies “But it has to be radical,” he added.