The UK must strike a “goldilocks” approach to crypto rules and not scare off a crop of fintech firms with an overly “hot” regulatory clampdown, the City minister has warned.
In a speech at Fintech Week London today, the City minister Andrew Griffith said the UK was on the “right path” to drawing up rules for the sector but must tread a fine line between consumer protection and innovation.
The comments come amid a growing transatlantic split on crypto rules as regulators in the US set out on a warpath and the UK government looks to win more investment from the sector.
A host of US crypto chiefs have made overtures to the UK and EU in recent months amid a slew of lawsuits from the Securities and Exchange Commission.
Ministers in the UK are looking to win over more crypto firms and will give regulators powers to draw up specific rules for the sector later this year through the Financial Services and Markets Bill making its way through parliament.
“The UK is on the right path to establishing itself as a global centre for crypto regulation – something I have described as a ‘Goldilocks’ approach of being not too cold, not too hot,” Griffith said yesterday.
“In short, we need to strike the right balance between innovation and protection. With the right regulatory framework in place, our country will continue to thrive as a global tech hub, attracting the brightest minds and revolutionising industries across the board.”
The government launched its plans to turn the UK into a “global hub” for crypto firms in April last year before the industry was plunged into a deep “crypto winter” which saw over a trillion dollars wiped from the value of the sector.
Ministers have doubled down on the plans in recent months despite the drop-off, however. The Prime Minister cheered an announcement from heavyweight Silicon Valley investor Andreessen Horowitz (a16z) to set up a crypto office in the UK last week, citing what it called a “predictable business environment”.
Griffith said the move from a16z showed the UK was taking a “uniquely tailored [approach] to blockchain and digital asset regulation.”