A new report from TheCityUK calls on UK government and regulators to act quickly to capitalise on the opportunities arising from the rapid growth of cryptoassets and the use of Distributed Ledger Technology (DLT) and take a world-leading position in this high-growth, high-potential sector.
The ‘Cryptoassets: Shaping UK regulation for innovation and global leadership’ report urges policymakers to use the UK’s newly acquired regulatory freedom and nimbleness to steel a march on global competitors and drive future innovation and competitiveness. The report also stresses the need to strike a balance between encouraging innovation, protecting consumers and providing regulatory clarity, while also ensuring legislation is proportionate and takes a technology neutral approach.
Miles Celic, Chief Executive Officer, TheCityUK, said, “There is a fierce global race underway to see which applications of DLT and cryptoassets will win out, and who will grab the biggest slice of the value they promise. The ultimate winner is for markets to decide, but government and regulators have an important part to play. They must set safe and robust rules for this burgeoning sector – while ensuring they don’t inadvertently squash good ideas before they can mature and flourish.
“The UK has a great track record in supporting innovation with regulation. Its regulatory FinTech sandboxes, for example, have been copied around the world. Now we need to show similar vision and nimbleness in our regulatory approach to cryptoassets.”
Cryptoassets and stablecoins have been rapidly increasing in popularity in recent years. Around 9.8 million people in the UK – approximately 19% of the population – owned cryptoassets in 2021, an increase of 558% since 2018 when just 3% of the population owned cryptoassets. The total market capitalisation of stablecoins has grown from $2.6 billion at the start of 2019, to $20 billion in September 2020 – with global trading volumes estimated at $198 billion in April 2021.
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