UK Crypto Industry Urges Establishment of its Own Regulations as MiCA Crosses the Finish Line

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On Thursday, the European Union concluded the comprehensive Markets in Crypto Assets (MiCA) legislation, which establishes a clear regulatory framework for the sector, making it one of the primary jurisdictions to do so. As all 27 EU member states are expected to comply with this new law, industry groups suggest that other jurisdictions, including the UK, which famously split from the bloc in a contentious "Brexit," may feel compelled to hasten the implementation of their own crypto regulations.

“While not flawless, MiCA is an extremely relevant regulatory stack that puts significant pressure on the U.K. and U.S. in terms of delivering operational clarity for crypto,” London-based lobby group CryptoUK said in a tweet on Thursday.

The MiCA package, tailored by the EU, outlines the authorization standards that crypto service providers and token issuers must meet, which will be enforced by member states. In contrast, the UK's approach is more staggered, with various regulators establishing their own unique requirements.

The UK's economic plan following Brexit is detailed in the Financial Services and Markets Bill, currently being reviewed in Parliament. This bill includes measures to regulate cryptocurrencies as financial instruments and stablecoins as payment methods. A consultation paper was published in February, outlining potential regulatory frameworks for the sector, which proposes comprehensive consumer protection rules.

On Monday, as the MiCA vote was approaching, Andrew Griffith, the UK Treasury Economic Secretary, informed CNBC that the government intends to establish precise regulations for cryptocurrencies within the next 12 months.

Nonetheless, the UK is currently lagging behind the EU in terms of setting guidelines for the crypto industry. This has been a source of concern for industry advocacy groups, who suggest that it could place significant pressure on UK policymakers.

“With the adoption of MiCA, the EU has solidified its position as a regulatory leader for years to come,” CryptoUK said.

At the same time, the UK has sought inspiration from MiCA.

Gwyneth Nurse, the Director General of Financial Services at the Treasury, noted at the Innovate Finance's Annual Global Summit in April that certain aspects of MiCA are noteworthy and have been incorporated into the UK's consultation on crypto regulations. "There are aspects of [MiCA] which are interesting and I think everybody likes so we have factored that in our paper," she stated.

According to the UK's consultation, policymakers are contemplating implementing an authorization framework that is comparable to MiCA. Despite the fact that the EU has provided substantial scope for regulating asset-backed stablecoins, the UK is striving to regulate them as payment methods. The UK's crypto proposals deviate from MiCA in that they exclude aspects such as settlement and financial advice.

The EU's advantage over the UK in terms of crypto regulations could simply be attributed to the fact that the former has been able to solidify its approach and provide clarity. In an email statement, Rhiannon Butterfield, a policy adviser on payments and innovation at the London-based advocacy group UK Finance, noted that the UK's strategy carries a degree of "uncertainty" because regulations have yet to be released.

Despite this, according to Butterfield, many crypto firms she has spoken with appreciate the UK's phased approach because it builds upon the existing financial regulations.

At the Innovate Finance conference, Nurse stated that the UK's strategy allows for more flexibility to adjust to changes in the crypto landscape.

According to Riccardo Tordera Ricchi, who serves as the Head of Policy and Government Relations at the Payments Association based in London, while the EU might require an additional legislative package called "MiCA 2.0," the U.K. will introduce the necessary regulations when the timing is appropriate.

Riccardo Tordera Ricchi stated that there is little chance of the U.K. attempting to accelerate its initiatives aimed at regulating the cryptocurrency industry at this time.

Source Coindesk