It is well-known that policymaking around the tech field in the United Kingdom is typically reactionary, and this is especially true in regard to the blockchain industry. Bitcoin ownership research, published by the Financial Conduct Authority (FCA), showed that almost 2 million people in the UK actively hold crypto. People in Britain are hearing more about cryptocurrencies too. Per the survey, the amount of UK citizens conscious of cryptocurrencies has climbed from 42% in 2019 to 73% in 2020.
Reactionary policymaking means that the UK’s crypto regime is occasionally behind those of its competitors, which could ultimately cause the country to become a less attractive place to conduct crypto-related business.
Following the rising interest in cryptocurrencies between 2016-2018, companies from across the crypto-asset ecosystem came together to form CryptoUK, the first self-regulated association for crypto-asset companies. CryptoUK is actively working to help educate politicians and regulators about the crypto-asset industry and to work with them in developing an appropriate operating framework for the UK.
Ian Taylor
The year 2020 is certainly the tipping point for institutional involvement which is due, in part, to greater regulatory clarity and safer regulated custody, infrastructure, and general understanding, according to Ian Taylor, the Chair of the CryptoUK association. He is a well-known and respected advocate for crypto-assets globally. Having spent 20 years as an investment banker he has had many senior roles across trading, treasury, and risk management. Ian is a respected advisor to and speaker for the digital asset industry. He is a passionate advocate of crypto assets and the many benefits they bring to society and financial services.
BitCourier sat down with Mr. Taylor to discuss the latest UK-related regulatory and policy news.
BitCourier: What prompted the creation of CryptoUK?
Ian Taylor: The ICO boom of 2017 and the super-charged focus of policymakers & regulators in the UK. The fact that many people were being scammed into losing money forced the government to act. Therefore, to ensure a balanced proportional approach to regulation was adopted we formed CryptoUK to act as the voice of the community. This is, in essence, the purpose of a trade body, to act as a bridge between the industry and the policymakers.
BitCourier: What has interest/momentum been like recently? How did COVID19 affect your organization?
Ian Taylor: We have increased our membership by 40% in 2020. This is un-connected to COVID but is rather a result of regulatory clarity, increased adoption, and better stewardship of the trade body.
BitCourier: In November, HMRC started sending strict tax compliance checks to UK-based Coinbase users. What is your take on this?
Ian Taylor: We work closely with HMRC, hosting semi-annual roundtables and webinars to discuss all things crypto tax-related. The request for information was a follow up to the action of the IRS in the US and this request for all UK exchanges that operated at that time. The request includes client information over and above a certain value of total trading, as crypto is considered property in the UK and is therefore subject to the Capital Gain Tax. Note, that all crypto trades are in scope, that is not only crypto to fiat but crypto to crypto. HMRC has unique powers to be both an enforcer of the law (similar to the FCA) and also a legislative body (similar to HMT).
BitCourier: Recently Queen Elizabeth expressed her interest in blockchain technology. Do you think we are witnessing cryptocurrencies going mainstream?
Ian Taylor: I recall talking to a taxi driver about Bitcoin 2 years ago. When your mother asks you what Bitcoin it is perhaps time to concede crypto is in the mainstream. It’s not an exact science however, I would argue that 2020 is certainly the tipping point for institutional involvement which is due, in part, to greater regulatory clarity and safer regulated custody, infrastructure, and general understanding.
BitCourier: In April 2018, your organisation sent an Inquiry on Digital Currencies to the Parliament’s Treasury Select Committee. What have the main improvements been in UK crypto regulations since that time?
Ian Taylor: We now have a clear taxonomy around the different tokens and how policymakers view these. This was a major part of the early work we did to help the government better understand the risks to the consumer and the wider benefits to society. For example, greater financial inclusion is an inherent benefit of cryptocurrencies. This year has seen many developments including AMLD5, a ban on retail clients trading crypto derivatives, consideration of crypto-asset promotions, and an upcoming public consultation on stablecoins.
BitCourier: Will regulations make the crypto market more accessible for new start-up companies in 2021?
Ian Taylor: The UK is an attractive regime to set up a business - good rule of law, stable economy and democracy, access to abundant capital, and a global FinTech centre. Regulation can be onerous and cumbersome, just look at the proposed new regime for stablecoin issuers in the proposed MiCA regulation. Policymakers are tasked with striking a fine balance – they must provide consumer protection and financial stability whilst promoting and nurturing new industries and technologies. That’s where CryptoUK comes in, as the UK’s trade body advocating for a fair, balanced, and proportional approach to regulation.
BitCourier: What is your point of view on the tokenisation of real-world assets like real estate, boats, vehicles, and collectibles? Is this something that requires more attention from regulatory bodies?
Ian Taylor: I observe most jurisdictions looking at security tokens as in the scope of the current financial regulations - FSMA in the UK and MiFID for Europe. This was clarified in the recent MiCA proposed regulation. In terms of the opportunities to tokenise assets, this is limitless and will in the very near term be an enormous new area of investment.
BitCourier: What is the process of becoming a member of CryptoUK? Can you give us a general profile of companies that you want as members?
Ian Taylor: To become a member of CryptoUK companies must demonstrate active participation in the market and commit to our Code of Conduct. Additionally, members must be willing to contribute to our consultation responses and regulator engagement. Our members, comprising leading companies from across the sector, believe that cryptoassets can help enhance the way we undertake financial transactions, to the benefit of consumers, business, and security.
BitCourier: What do you seek in terms of partnerships?
Ian Taylor: We are happy to discuss partnerships with anyone where this is a clear benefit to both parties. Right now we are working hard to improve our lobbying efforts, so are looking for partnerships that help us achieve this goal.
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