Government proposals aim to support the greater use of digital assets in the investment sector
Credit: 3D Animation Production Company/Pixabay
The government has claimed plans to replace swathes of EU legislation could enable much wider use of cryptocurrencies and other digital assets.
Proposals to expand regulation to new forms of payment and investment are intended to support government’s ambition to put the UK’s financial services and digital sectors at the “forefront of technology and innovation”.
Unveiled today by chancellor Jeremy Hunt, the so-called Edinburgh Reform seek to take advantage of “Brexit freedoms” by overhauling banking rules. The reforms include a package of more than 30 regulatory measures which the chancellor said will “turbocharge” growth in towns and cities across the UK.
Including among the planned changes are a range of measures focused on supporting the potential wider use of cryptocurrencies and other digital assets. The government reiterated plans to imminently launch a consultation on the proposed establishment of a central digital currency managed by the Bank of England, as well as committing to “publishing a response to the consultation on expanding the Investment Manager Exemption to include cryptoassets”.
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HM Treasury will also next year support the launch of dedicated a ‘sandbox’ for financial markets – allowing regulators to test out potential shake-ups or new approaches at small scale and in a controlled environment.
“The government is ensuring that the regulatory framework supports innovation and leadership in emerging areas of finance, facilitating the adoption of cutting-edge technologies,” the department said. “The measures… build on the FSM Bill, which will establish a safe regulatory environment for stablecoins – which may be used for payments – and ensure the government has the necessary powers to bring a broader range of investment-related cryptoasset activities into UK regulation.”
More broadly, the suite of reforms unveiled today will loosen the banking rules introduced after the 2008 financial crisis, which saw some UK banks face potential collapse.
Measures include a commitment to make “substantial legislative progress” on repealing and replacing the Solvency II rules on how much capital insurance companies must hold next year, which is expected to unlock more than £100bn of private investment, the Treasury said.
“We are committed to securing the UK’s status as one of the most open, dynamic and competitive financial services hubs in the world,” Hunt said. The Edinburgh Reforms seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses. And we will go further – delivering reform of burdensome EU laws that choke off growth in other industries such as digital technology and life sciences.”