Will the UK benefit from US regulators’ fumble on digital assets?
by Adam Saville-Brown of Koinly
The UK has been touted as the future ‘capital of crypto’, with the Treasury announcing in April 2022 that the UK would be a global crypto asset and technology hub. The government also released a briefing paper in January 2023, clarifying what will be of focus for cryptocurrency regulation ahead of the upcoming tax season.
The past financial year saw the UK government finally take the cryptocurrency industry seriously. Updated guidance saw HMRC define what a ‘crypto asset’ actually is, and the taxable scenarios involving DeFi, airdrops, wrapped tokens and stablecoins were clarified.
Meanwhile, there remains a constant battle in the United States between three and four letter government agencies (such as the SEC, IRS, and CFTC) who are all trying to grapple for control of the cryptocurrency and digital asset space. Chairman of the Securities and Exchange Commission, Garry Gensler, appears to be leading the charge, having made the most ground in regulation across the space – especially in light of the FTX collapse in late 2022.
Conversely, the joint efforts between the Treasury and the Bank of England demonstrate a level of coordination the United States could only dream of. The UK has always had a reputation as one of the world’s leading financial hubs, and the population density of London, along with its connection to the other global financial hubs, provides the perfect sandbox for innovation.
Prime Minister Rishi Sunak launched a task force into Central Bank Digital Currencies in early 2021 (in his capacity as Chancellor) – years before his peers in other western countries started putting digital assets on their radars. With a pragmatic approach to rolling out what may be the first digital central bank currency outside of China, the UK continues to innovate even during the throws of the current crypto bear market.
With a bustling tech screen in the heart of London (Silicon Roundabout in Shoreditch), in addition to a rich history of entrepreneurship and support for businesses, the UK has produced a generation of entrepreneurs and risk-takers that may well see our own Richard Branson of web3 born from the period of innovation we are now entering.
The integration and evolution of the financial sector have already started – but still very much remain in their infancy. Over time, blockchain technology and web3 will continue to see wider adoption. We have already seen how the digital transformation of entire industries were accelerated during the early 2020s as a product of the COVID pandemic. The UK is primed for enormous growth in this space, should it wish to remain at the bleeding edge.
The idea of power to the people is ingrained in UK history since King John of England signed the Magna Carta birthing the modern democracy we have today. It may have its issues, but society works together to solve them.
Web3 is an evolution and extension of that, allowing participants to engage and lead entire platforms and communities virtually at the click of a button. Entire sectors are now investigating how they can integrate with blockchain technology, understanding that by not keeping up, they will be left behind. The UK is well-placed globally to lead the charge into the mid-to-late 2020s if it continues to maintain a coordinated and innovative approach compared to other countries around the globe.
About the author…
Adam Saville-Brown from Koinly has extensive experience spanning business, sales, finance and the cryptocurrency sectors over the past 13 years. Adam has launched multiple ventures after successfully growing start-ups and established brands both in Australia and globally.