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Appold Commentary and Feedback on the UK’s Future Financial Services Regulatory Regime for Digital Assets

LONDON, UK / ACCESSWIRE / November 1, 2023 / This week, His Majesty's Treasury confirmed its final proposal for digital asset regulation in the UK with the publication of the government's response to the consultation and call for evidence on the future financial services regulatory regime for cryptoassets, which was published on February 1st 2023.

In a continued and increasingly earnest trend of institutional and government engagement with the industry, the UK government's consultation and subsequent response have strongly signalled its intention to bring several digital asset ventures and technologies into the financial services regulatory perimeter for the first time. Throughout its response, the government has been keen to emphasise a "steadfast" ambition to make the UK a global hub for digital asset technology through a "proportionate approach" to its regulatory regime.

As outlined in the consultation, this approach is viewed by the government as laying the groundwork for a business environment where digital asset companies have the required clarity of the regulatory standards to invest and grow, whilst customers have the protections necessary to operate and utilise the digital assets ecosystem confidently.

It is interesting to note the consistent emphasis that the government places throughout the response paper on having listened to industry voices and concerns, as well as performed wider stakeholder engagement to properly and proactively understand the digital assets space - a positive signal of state and institutional enthusiasm to work with and grow the industry.

Overall, the response paper shows that of the 131 respondents from a wide range of stakeholders (including digital asset-native firms, trade associations, universities, traditional finance, law, and consulting), respondents largely agreed with the approach put forward in the consultation, with 79% of responses broadly supportive of the government's proposals. 12% had mixed or neutral feedback, and the remaining 9% were critical of the proposals.

Likely to have been reassured by the largely positive reception to its consultation, the response paper confirms that the government will broadly follow the proposals as initially outlined. Interestingly, the government states that the most critical responses came from those who disagreed with the fundamental basis of bringing digital assets into the financial services regulatory framework ("on the basis that they should be banned, or, for example, treated in line with gambling regulation"). Encouragingly, the government was firm and clear in rejecting such proposals.

The most prominent themes in responses, that received over 19% of respondents, concerned:

1) Non-fungible tokens and utility tokens.

2) The geographic scope of the regulatory regime.

3) The need to make a stronger distinction between services provided to professional investors as opposed to retail consumers.

4) The need to provide greater clarity regarding phase 1 (covering the regulation of activities related to fiat-backed stablecoins) and phase 2 activities (covering the broader digital asset regime).

There is still much work to be done to build and grow the UK's digital assets space, and at Appold, we are working with officials in HM Treasury and our extensive contacts in the digital assets stakeholder community to deliver the regular engagement and productive dialogues required to ensure secondary legislation is considered, clear, and optimal for sustainable business. During a recent discussion on the potential of the digital assets industry between Appold Partners Rob Gaskell and Pete Osborne, and the Chancellor of the Exchequer, The Rt. Hon. Jeremy Hunt MP, the Partners reaffirmed Appold's commitment to support and facilitate cooperation between institutions and industry, which was received positively by the Chancellor. The release of the government's response this week is another positive sign of a growing institutional conviction to work with stakeholders to create a clear and defined regulatory framework that protects the UK's financial stability and market integrity, whilst allowing for the development of a world-leading hub for digital assets.

About Appold: Based in London, Appold is an independent advisory company in the blockchain industry covering all areas of Web3, tokenisation, distributed ledger technology and decentralised finance. Appold assists and supports the full spectrum of market participants from Institutions and Corporates through to blockchain protocols and technology providers.

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SOURCE: Appold



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