The UK will soon experience some drastic shifts in the Crypto regulation. However, the government and the members of parliament seem to have divergent sentiments on these decentralised digital assets. This write-up highlights potential regulations and how they will impact you.
Apparently, the UK government has suggested that Cryptocurrencies should be regulated just like other financial services; new measures have been announced to protect the consumer and specifically to regulate Crypto exchanges.
On the same, the Treasury Select Committee is going further to recommend that Crypto be classified more along the lines of gambling.
Government Proposals:
- New guidelines and regulations on token emission, trading, and lending.
- Apply regulations related to traditional financial services to the crypto exchanges.
- Precautions in the event of insolvency of the firm – customer funds.
MPs’ Recommendations:
- To approach Crypto as gambling because of its “absence of utility and extreme price fluctuation.”
- More stringent approach to unregulated Cryptocurrencies like Bitcoin and Ether.
- Impose tax on selling or using Cryptocurrency in the development of a program or fund meant to assist indebted clients or in the case of substance abuse.
Impact on Consumers
- No Compensation Plans: The government and regulators have no intentions of providing investors a cash cushion in case of an international credit crunch like the one witnessed in 2008.
- Tax Implications: From the financial year 2024-25, there will be a new column for Crypto asset disposal in the self-assessment tax return.
- Scam Concerns: Additional regulation cannot guarantee the elimination of the total threat of scams.
- Potential ‘Halo Effect’: Regulations put in place by the government might create a false sense of security for consumers.
Industry Reaction
Most Crypto investors are against the rather one-sided MPs’ measures as they do not mention the possible positive impacts and applications of Cryptocurrencies. They view Crypto as an instrument of gambling and believe it may lead to the loss of tax receipts.
Broader Implications
Even if you’re not a Crypto enthusiast, these regulations could easily catch up with you. See how:
- Digital Currency: The Bank of England and the Treasury are thinking about the digital pound to defend sterling against Stablecoins.
- Financial Innovation: MPs agreed that using Blockchain technologies could contribute to reducing payments expenses.
- UK as a Crypto Hub: The government’s strategy plans to position the UK as a focal point for the Crypto industry.
While it builds up, there is no doubt that its future bears great importance to the investor and the financial market in the UK, let alone the global financial economy.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used for legal, tax, investment or financial advice.
