Why does UK Treasury want to remove blockchain from crypto definition?

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Why does UK Treasury want to remove blockchain from crypto definition?

 Why does UK Treasury want to remove blockchain from crypto definition?
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Highlights

  • A recent report by the HM Treasury, ‘Cryptoasset promotions: Consultation response’, suggested that the word blockchain should be removed from the crypto definition.
  • The HM Treasury stated that while the blockchain does happen to be the underlying technology of the crypto assets, it could change as the industry evolves in the future.

A recent report by the Her Majesty’s (HM) Treasury has suggested that the word blockchain should be removed from the crypto definition. In the report titled, ‘Cryptoasset promotions: Consultation response’, the Treasury said though the blockchain is the underlying technology of the crypto assets, but it may change as the industry evolves in the future.

Besides, the government proposed a change to remove the Distributed Ledger Technology (DLT) while describing crypto assets. The report further clarified that this will future proof the definition for innovations in the underlying technology that crypto uses.

The report further said that the proposed definition is still in its nascent stage and final drafting of a definition will happen after it is proposed in the Parliament.

Also read: What exactly is Ethereum EIP-1559 upgrade on Polygon?

DeFi too could come under regulation

Apart from the crypto asset definition change, the HM Treasury also indicated that the decentralized finance (DeFi) could also come under regulation. Going ahead, the Boris Johnson government will be monitoring the space of the fast-growing industry.

According to the report as the DeFi platforms, which operate in the form of DApps, are not controlled by a central authority. Therefore, the DeFi platforms could well come under the scope of the regime depending on the activities being undertaken. Having said that, it will be closely monitored, and a decision will be taken on a selective basis.

Also read: What makes EasyFi (EZ) crypto so unique?

Effect on crypto market

Many experts feel that the definition change suggested by the HM Treasury can indeed hamper the decentralised nature of the crypto assets. Besides, it would empower the government to take calls which may be contrasting to the crypto industry’s operations. With such regulations, the crypto assets may well become a centralised asset, which is largely controlled by the government, from a decentralised entity.

According to a Chainalysis report, the UK is one of the major crypto hubs in Europe and the third largest country when it comes to crypto adoption as per the Finder.com survey. Such a drastic step could have a significant and long -term impact on the crypto market, which might not be restricted to the UK and may have a global impact. 

Only time will tell how the UK government will bring the above-mentioned changes. As of now, the report highlights have definitely made crypto enthusiasts rethink about their investments and future within the UK.

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