UK Regulators Eye Crypto
UK regulators said cryptoassets do not currently pose a threat to monetary or financial stability and they want to support innovation that will bring benefits to consumers.
Three regulators spoke on a panel at the CryptoCompare Digital Asset Summit in London today.
#CryptoCompareSummit now: Regulators are working together globally to balance risk, consumer protection while ensuring innovation can still take place – panel w/ Gillian Dorner @hmtreasury, Martin Etheridge @bankofengland; Samantha Emery @TheFCA; @lwintermeyer @GlobalDigitalFi pic.twitter.com/cFHlbqjwuc
— CryptoCompare (@CryptoCompare) June 12, 2019
The UK government launched a cryptoassets taskforce last year between HM Treasury, the Financial Conduct Authority and the Bank of England. The taskforce published a final report in October last year.
Gillian Dorner, deputy director, financial services, domestic strategy at HM Treasury said the taskforce was launched because the government has the ambition for the UK to be the most innovative economy and maintain its position as a financial centre while balancing opportunities and risks.
Dorner added that the taskforce reviewed how cryptoassets interact with the current regulatory framework and the risks of consumers buying unsuitable products, illicit activity, market integrity and financial stability
She continued: “The technology is not currently delivering significant benefits but it is in an early phase and there could be benefits in cross-border payments and capital raising. There will be a consultation this year on aspects that are not covered by current regulation.”
Samantha Emery, FCA Innovate’s interim head of department, said the regulator launched a consultation on cryptoassets in January and will publish results in the summer. She said the FCA could potentially ban the sale of derivatives referencing cryptocurrencies to retail customers.
“There is no value in the FCA sticking its head in the sand and we look at activities we regulate, rather than the technology,” Emery added.
She highlighted the Global Financial Innovation Network which will allow innovative fintechs to perform cross-border testing.
“In GFIN we are working with more than 35 global regulators to understand worldwide trends,” Emery added. “The first cohort has started cross-border testing.”
Martin Etheridge, head of notes operation at the Bank of England, said cryptoassets do not currently pose a material threat to UK financial stability.
“There is no material linkage to systematically important institutions or markets,” he said. “We perform ongoing monitoring and we are working closely with the Basel committee.”
He highlighted that when the central bank reviewed RTGS, the UK payments system, it decided that DLT was not mature enough to use but ensured that the platform will be interoperable with future technology.
Etheridge added: “We are not looking to stop innovation and cryptoassets could bring significant utility in the future.”
Development of a transparent derivatives market is a critical inflection point for the nascent asset class.
Interest is expected to grow across crypto asset-based futures, options and NDFs.
The FCA has only approved a handful of UK-based crypto custodians.
Executives testified before the US House Committee on Financial Services.
Project Jura explored cross-border settlement of tokenised assets on a DLT platform.