Britain kicks crypto when it’s down

Picture illustration of crytocurrencies
Representations of Bitcoin and other cryptocurrencies on a screen showing binary codes are seen through a magnifying glass in this illustration picture taken September 27, 2021. REUTERS/Florence Lo/Illustration

LONDON, Feb 1 (Reuters Breakingviews) - Policymakers wrestling with how to regulate cryptocurrencies face a big initial question: does the industry need bespoke rules or would ones already on the books do the job? Britain’s answer, unveiled by Financial Services Minister Andrew Griffith on Wednesday, is that the existing framework suffices. The government intends to regulate the digital assets using the Financial Services and Markets Act of 2000, legislation applied to the City of London. By comparison, the European Union is introducing the dedicated Markets in Crypto-Assets, or MiCA, while some U.S. senators floated a similarly tailored proposal.

Britain’s approach is tough on bitcoin and its ilk. “Same risk, same regulatory outcome” is the mantra. Any UK-based cryptocurrency lenders or ones conducting business with Brits, for example, may have to operate with minimum capital and liquidity requirements. The consultation also notes that the City and Wall Street typically segregate activity consolidated by crypto groups, such as being a broker, exchange, lender or custodian. Coming on the heels of last year’s collapse of Sam Bankman-Fried’s FTX means Britain’s kick lands when the industry is down. At the same time, the scandal surrounding the bankrupt exchange suggests a swift kick is called for. (By Liam Proud)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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