Why have UK lawmakers opened an inquiry into crypto industry?

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Why have UK lawmakers opened an inquiry into crypto industry?

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 Why have UK lawmakers opened an inquiry into crypto industry?
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Highlights

  • The UK lawmakers are keen to know the public opinion on how it can play a role in the financial economy.
  • The UK Treasury Committee urged the citizens to produce evidence associated with the risks and opportunities which the cryptos. 
  • The Brits have September 12 to submit their evidence to the committee which will in turn present it during the Parliament session.

While the role of cryptocurrencies in a traditional economy has often been a debatable subject, UK lawmakers are keen to know the public opinion on how they can play a role in the financial economy. The UK Treasury Committee urged the citizens to come up with evidence associated with the risks and opportunities with the cryptos.

The Treasury wants to have a better understanding of how crypto assets can operate under a regulatory purview ensuring adequate protection for consumers and businesses without compromising on innovation and development.

What Treasury wants to know from public?

The Treasury has urged the public to submit a written document sharing their thoughts on topics such as digital currencies replacing the traditional fiat model, the opportunities and the risks in adopting central bank digital currency (CBDC) etc.

The Brits have September 12 to submit their evidence to the committee which will, in turn, present it during the Parliament session. The government seems to be keen to understand how regulators and government can work in tandem to explore the possibility of environmental and resource intensity of using crypto-asset technology.

The UK regulators have been ensuring that crypto firms follow the rules by the book while operating in the country. On 13 June, the Bank of England Deputy Governor Jon Cunliffe had said that the crypto activities, going forward, should be carefully regulated and not allowed to function in scenarios where it’s not monitored. Earlier this year, the Financial Conduct Authority had set deadlines for crypto firms to apply for licence in order to operate.

Will the UK become a crypto hub?

The recent move may also be seen as a move to make the United Kingdom a crypto hub. Former Chancellor of the Exchequer Rishi Sunak, earlier in March this year had laid out his plans to make UK a crypto hub

Then, Sunak urged the Treasury to take out the responsibility of minting its own NFTs and handed the commitment to the Royal Mint to create the NFTs. However, his resignation as the finance minister, coupled with the calls for regulations amidst the crypto crash and the Terra fiasco, has put many of those plans up in the air.

Even as the UK continue to traverse through a period of uncertainty, the BoE’s decision to introduce legislation on a regulatory system for stablecoins by August. The regulators are keeping no stones unturned to ensure that before going ahead, they have the mechanisms in place to protect customers.

Conclusion

The move clearly states that the UK government and the regulators are willing to know the opinion of the stakeholders and the key people who could be affected by any decisions they take. While opening the forum for public opinion can be seen as a positive step, at the same time, it would also want to keep in mind that they don’t rush to any decision making which will hamper the crypto environment in the country or stand in the way of innovation and its adoption.  

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