15 October, 2020 

How Cryptocurrency Regulation Works In The UK

For a long time, the UK denied the fact that cryptocurrency is money, respectively, the legislation could not operate in this area in the same way as with traditional money
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How Cryptocurrency Regulation Works In The UK

In the UK, financial regulation is within the jurisdiction of two bodies — the Bank of England and the Financial Conduct Authority (FCA). In general, the United Kingdom is a fairly business-friendly territory. Low taxes, a well-developed banking system, and large stock exchanges make the UK an ideal offshore state.

Money Yet Not Money

For a long time, the UK denied the fact that cryptocurrency is money, respectively, the legislation could not operate in this area in the same way as with traditional money. It can not be said that the state finally decided on the answer to this question today, however, the government recognized its relevance and the need for regulation by releasing in 2019 a guide regulating acts related to cryptocurrency assets.

This guide, as subjects, has affected all individuals and organizations buying and selling cryptocurrency and the services associated with it in the UK. However, exchange tokens have remained outside the optics of the legal field, and operations with them are still not subject to FCA regulation. Fiat tokens (tied to the rate of fiat money, usually the US dollar) were recognized as real money, subject to the laws of money regulation in the UK. Security tokens can also fall under the category of securities. All cryptocurrencies recognized as equivalent to money require a license for activities related to them, even if it is just consulting.

The Pursuit Of Technology

Regarding the blockchain, like many other countries, the UK is full of optimism and the desire to make this technology serve the benefit of the fatherland and citizens. The state gives green light to developments in this area and creates all the conditions for cryptocurrency startups to develop.

The UK is in the process of developing its own state cryptocurrency. Although it still can’t find enough reason to recognize cryptocurrencies as real money, experts acknowledge that a state cryptocurrency can become one if it has all the signs of real money, and active work is ongoing.

Bank of England analysts believe that it is very important to maintain the confidentiality of user data when developing a state cryptocurrency, in contrast to China, which insists on centralization and state control. The Bank also expresses concern that cryptocurrencies will undermine the established work of the traditional banking system, in particular, the sphere of loans, which is an important component of the work of any bank.

At the moment, cryptocurrencies in the UK have not yet acquired the status of real money and you can buy something from them only from some small independent businesses. We can say that despite the favorable environment for cryptocurrency startups, the UK's uncertain position regarding cryptocurrencies forces companies to issue tokens in countries that are more friendly to digital money.

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