The Crypto and Digital Assets APPG publishes report on UK Crypto and Digital Assets sector

In a very positive move for the UK crypto industry, the Crypto and Digital Assets Group, an All Party Parliamentary Group (APPG) comprising MPs and Lords in the UK Parliament, has recently released an extensive report calling for immediate regulation of the cryptocurrency and digital asset industry in the UK. This report, titled “Realising Government’s Vision for the UK To Become a Global Hub for Cryptocurrency & Fintech Innovation,” is a collaborative effort between Members of Parliament and the House of Lords, making it the first of its kind in addressing the cryptocurrency and digital assets sector.

The report has identified a number of opportunities and potential challenges. It presents a total of 53 recommendations to the government, covering various critical aspects. These include the UK’s regulatory approach towards cryptocurrencies, the current role and strategies of UK regulators, the potential benefits of Central Bank Digital Currencies (CBDCs) like a “Digital Pound,” as well as the risks associated with consumer protection and economic crimes.

One of the recommendations in the report that will be especially welcomed by our crypto business clients aims to ease their struggles in getting UK banking services. The report recognises that UK cryptocurrency and digital assets firms are struggling to secure access to UK banking services, which they believe could fundamentally undermine the Government’s ambition for the UK to become a cryptocurrency and digital asset hub and could be a significant barrier to growth and innovation. The report urges the Government to take urgent steps to ensure that there are clear pathways for legitimate and responsible companies to be able to access fundamental services required to operate regulated businesses, such as adequate insurance and banking facilities. The APPG report encourages the Government to take the lead in finding a solution for both the banking and cryptocurrency and digital assets industries.

This report showcases the UK government’s commitment to their vision of the UK becoming a global hub for cryptocurrency and fintech innovation. This will undoubtedly help us in our continuing quest to push for the much needed new bespoke tax legislation for crypto activity, to make the UK crypto tax system simpler and easier to navigate.

• Cryptocurrency is here to stay and needs to be regulated as financial services to protect consumers
• The growth of the cryptocurrency and digital asset sector, without comprehensive regulation, presents considerable risks.
• The UK has a finite window of 12-18 months to ensure early leadership on cryptocurrency regulation

• Cryptocurrency and digital assets have the potential to significantly transform our established financial services system and the way we deal with money.
• The rapid growth of cryptocurrency and digital assets in recent years and the increased interest and adoption amongst consumers and investors, suggesting the sector is here and needs to be regulated as financial services to protect consumers and to ensure guardrails for investment and economic growth.
• The APPG supports the position of HM Treasury that cryptocurrency and digital assets are best regulated, in so far as is possible and appropriate, within existing and new financial services regulations, which has a track record in mitigating risks to consumers and investors.
• The growth of the sector, without comprehensive regulation, also presents considerable risks particularly in terms of consumer protection, economic crime, and financial stability. Regulation of cryptocurrency and digital assets within financial services is vital to addressing consumer risks whilst harnessing the sector’s potential and contribution towards economic growth.
• The cryptocurrency and digital assets industry presents a number of potential opportunities in the UK, including efficiencies and innovation in financial services and payments, economic growth, contribution to careers of the future, research and collaboration opportunities and greater financial inclusion for those who are currently marginalised. The UK is well placed to harness these opportunities, but it will require cross governmental strategic planning to realise them.
• The APPG also welcomes the proactive steps that Government is taking alongside the Bank of England to explore the potential of a digital pound. The public and consumers are increasingly embracing more digital means of payments and it is right that Government and regulators too respond to this trend and actively explore the need for further regulation in this space.
• Given the broad nature of cryptocurrency and digital asset regulation, Government will need to ensure that it has a joined up and coordinated approach across all Governmental Departments and agencies that will be impacted by the growth of cryptocurrency, digital assets and blockchain technologies. Government should consider the appointment of a ‘Crypto Tsar’ who can help coordinate across departments to ensure a consistent approach.

You can download the full report here