Industry heavyweights respond to UK’s crypto asset regulatory framework proposal

The deadline has travel for comments connected a consultation insubstantial and telephone for grounds released by the United Kingdom’s HM Treasury connected a projected crypto plus regulatory framework. The long-awaited paper, published successful February, drew elaborate responses from a assortment of cryptocurrency manufacture players.

Blockchain supplier Polygon Labs, task capitalists Andreessen Horowitz (a16z), the Association for Financial Markets successful Europe (AFME) and the Digital Pound Foundation (DPF) released their responses to the telephone for comments connected May 1. Among these divers voices, immoderate communal issues were raised.

The Treasury’s telephone for “same risk, aforesaid regulatory outcome” was good met, though determination was nary azygous knowing of what that entailed, speech from its ground successful the Financial Services and Markets Act of 2000. A16z pointed retired weaknesses successful the United States Security and Exchange Commission’s dependence connected the Howey trial arsenic it assessed the UK proposal. In its response, a16z wrote:

“It is encouraging that the Treasury’s mentation of this rule recognises that it does not mean it volition beryllium due to use precisely the aforesaid signifier of regularisation successful each cases to execute the aforesaid regulatory outcome.”

This tied into the proposal’s accent connected regulating activities, alternatively than assets themselves. The basal differences betwixt centralized concern (CeFi) and decentralized concern (DeFi) were cardinal to this discussion. Polygon wrote:

“The root of hazard successful DeFi systems is importantly antithetic than that successful centralised systems, similar CeFi oregon the accepted fiscal system. To this end, it whitethorn beryllium much close to update: ‘same risk, aforesaid regulatory outcome’ to ‘different root of risk, aforesaid regulatory outcome.’"

The projected model treated fiat-backed stablecoins and algorithmic stablecoins differently, classifying algorithmic stablecoins arsenic an “unbacked cryptoasset.” Polygon peculiarly favored the activity-based regulatory attack successful this case.

Related: UK Treasury seeks input connected taxing DeFi staking and lending

The AFME, which worked with consultants Clifford Chance connected its response, noted the value of an planetary taxonomy of crypto assets for effectual planetary regularisation and the activities attack to exclude blockchain-based representations of worth specified arsenic loyalty and rewards programs.

1/ @a16zcrypto submitted our effect to the UK @HMTreasury "Future Financial Services Regulatory Regime for Cryptoassets" consultation. We enthusiastically clasp the UK's attack for a "proportionate and focused, agile and flexible," regime. . . https://t.co/rT85Xfd8so

— Brian Quintenz (@BrianQuintenz) May 1, 2023

The AFME besides identified the territorial scope of the projected crypto regulations, which are written to use to companies that supply services to U.K. nationals. That is simply a broader scope than regulations concerning accepted assets have, it noted.

The DPF perceived imaginable deviations from the “same risk, aforesaid regulatory outcome” rule successful the handling of respective forms of crypto asset, and it commented connected them successful detail. The classification of stablecoins was 1 of the points it thought needed clarification successful this regard.

The U.K. authorities volition respond to the collected responses it receives to this insubstantial and prosecute successful further consultations connected circumstantial rules arsenic its adjacent step, if they are “taken forward.”

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