UK Legislators Debate Cryptocurrency Regulation

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Legislators in the United Kingdom disagree on how cryptocurrency should be regulated, with some urging treating it like gambling and others supporting the government’s initiatives to include digital assets within the umbrella of already-existing financial services legislation. The government’s plan to consider cryptocurrencies as regulated financial services was supported by an All Party Parliamentary Group (APPG), comprising 15 members of Parliament and Lords (from the upper chamber) for crypto assets, which published its own report on Monday. According to Chair Lisa Cameron, one of the reasons why it supports the government’s position to regard cryptocurrency as a financial service is tax collection—the U.K. The government has stated that it intends to introduce specific cryptocurrency rules in stages, with the passage of the Financial Services and Markets Bill being the first. The exact regulations that bring cryptocurrency into the regulatory fold will need to be approved by both chambers of Parliament, and this measure would give several regulators additional authority to regulate cryptocurrency. Cryptocurrency risks are comparable to those in conventional financial services, and financial services regulation has a proven track record of reducing them.

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Following the cryptocurrency industry’s news-making collapse last year, world leaders are establishing uniform guidelines and regulations. However, there seems to be a difference in how stablecoins are handled between developed and underdeveloped nations. While emerging nations like the G-20 have called for stricter regulations or outright bans on stablecoins, advanced economies like the Group of Seven (G-7) appear to be inclined to legalising and regulating them. Disagreements between the two organisations may hinder the adoption of international standards for stablecoins or at the very least pose a danger to the global financial regulators’ goal of a united supervision. Despite some authorities’ claims that such crypto-related explosions have little effect on broader financial stability, the collapse of the terraUSD stablecoin in May 2022 resulted in the disappearance from markets of approximately $60 billion, leading the world’s regulators to take action.

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