5th February 2023 > > The UK.

tl;dr

The UK is at last starting its campaign to earn crypto tax dollars.

Market Snap

Market Wrap

BTC is just treading water, which is much as most of us expect for the next while.

Or so I would have thought. A quick scan of market commentaries from the less well-informed paint a picture of techies and other purveyors of snake oil calling for a retracement in the short term. The lack of movement in perpetual futures funding rates indicates that their audience is ignoring their siren calls.

Curious Cryptos’ Commentary – UK part 1

Last Wednesday the UK government announced (https://hmtreasury-newsroom.prgloo.com/news/embargoed-2230-uk-sets-out-plans-to-regulate-crypto-and-protect-consumers) a consultation process to develop and implement a new legislative and regulatory framework for cryptos in the UK.

About time is the most reasonable response to this announcement. The EU, and to a much lesser extent the US, have stolen a march in terms of providing clarity for crypto businesses to invest and furnish the ever-hungry government maws for tax dollars to fritter and waste.

The consultation document comes in at a mere 82 pages (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133404/TR_Privacy_edits_Future_financial_services_regulatory_regime_for_cryptoassets_vP.pdf) which is lightweight as far as bureaucrats and civil servants are concerned.

The CCC research team is trawling its way through this document and will report back in more detail if there are specific points of interest.

But for now, what is clear from the outset is that there are many positives. For example, this quote occurs in paragraph two:

“The government’s view is that the technology underpinning this innovation could bring a number of benefits, and with appropriate regulation and safeguards, certain cryptoassets and associated activities can offer significant new financial services opportunities for users.”

That is a very constructive start.

Later on, the document sets out some core principles that will underpin the new regulatory regime:

“Same risk, same regulatory outcome.”

“Proportionate and focused.”

“Agile and flexible.”

The CCC is often scathing, and justifiably so, of the clear disconnect between bureaucrats and the real world, but it seems that the UK Treasury A-team must be at work in this instance.

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There is of course a section on the pre-supposed environmental impact of cryptos, for there is no greater religion of the early 21st century in the liberal Western world than the desire to sacrifice our well-being on the altar of sustainability, but I shall pass commenting on that for now.

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Throughout the document specific questions are asked of market participants which seem to me to be genuinely designed to develop understanding and appreciation of the crypto world.

With a relatively short timescale of the end of April 2023 for the consultation process I have yet to find a deadline for the development and the implementation of the new rules.

One can only hope that the Treasury A-team is as impatient as we are to see the new regime in place.

Curious Cryptos’ Commentary – UK part 2

Despite the current lack of regulatory and legislative clarity in the UK, our long-standing reputation for welcoming financial innovation remains a key asset.

A recent piece of research (https://recap.io/blog/the-rise-of-crypto-hubs-which-cities-are-leading-the-way-in-cryptocurrency) places the UK in the number one spot for inward crypto investment.

It is possible that Rishi Sunak, UK Prime Minister, achieves at least one of his stated aims to make the UK a “global hub for crypto-asset technology and investment”.

Curious Cryptos’ Commentary – UK part 3

In yet another positive development for the UK, official policy with regard to CBDCs (Central Bank Digital Currencies) has taken a turn for the better.

Regular readers need no reminding of the horrors occasioned by CBDCs.

It can come as no surprise that coercive regimes that place no value on personal liberty and freedom (looking at you China and Russia) are already implementing their CBDC plans.

It should come as no surprise – though some will disagree with me on this point – that US policy is against the implementation of CBDCs, at least for now.

The UK is moving towards the US position with an announcement that there will only be preparatory work up until 2030.

A lot will happen over the next seven years but, for now, the UK has effectively joined the small, but growing, club of countries that provide a bulwark against financial repression.