The UK Can Attract Web3 Firms by Improving Crypto Regulation, Says Think Tank
A conservative think tank called Policy Exchange has published a report on Web3, offering 10 proposals to improve crypto regulation in the United Kingdom. The think tank suggests that the UK can take advantage of the regulatory uncertainty in the United States, which has led to Web3 firms leaving, by creating its own favorable regulatory environment.
Protecting DAO Token Holders
One of the proposals in the report is to limit the liabilities of individuals who hold tokens in a decentralized autonomous organization (DAO). The report highlights a recent ruling in the US that holds any individual American who owns or previously owned tokens in a DAO liable for any legal violations committed by the DAO.
Loosening KYC Requirements
The report also recommends that the Financial Conduct Authority (FCA), the principal financial regulator in the UK, relaxes its Know Your Customer (KYC) approach. This would allow for the use of innovative techniques like digital identities and blockchain analytics tools.
Avoiding Overregulation
The experts advise against undermining self-hosted wallets and regulating proof-of-stake services as financial services. They also propose allowing private stablecoin issuers to place stablecoin reserves in the Bank of England and creating a “tax wrapper” for crypto exchanges. Additionally, they suggest establishing a new sandbox under the Department for Science, Innovation, and Technology.
Tougher Regulatory Stance in the UK
In recent times, UK regulators have taken a stricter approach towards the digital assets industry. The Treasury is considering banning cold calls promoting crypto investments, and the FCA has warned local crypto businesses to comply with marketing rules or face consequences.
Hot Take: UK Can Become a Global Hub for Web3
The United Kingdom has the opportunity to position itself as a global hub for Web3 firms by improving its crypto regulation. By implementing the proposals put forward by Policy Exchange, the UK can attract Web3 companies that are leaving the US due to regulatory uncertainty. Creating a favorable regulatory environment, protecting token holders, and embracing innovative techniques will help the UK establish itself as a leader in the crypto industry. However, it is crucial for regulators to strike a balance between regulation and innovation to ensure the growth and success of the sector.
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