Oliver Linch of Bittrex Global tells SiliconRepublic.com why crypto regulation in the EU is taking a while and how the UK is looking to ‘rival or better’ it through recent proposals.
In the wake of the FTX collapse late last year, governments across the world started to accelerate their plans to increase regulation in the crypto sector. The UK was one such country that set out a detailed plan last month to regulate the sector and protect its growing number of consumers.
Spearheaded by the Rishi Sunak administration, the proposals aim to strike a balance between giving consumers in the crypto industry confidence in their investments with rules and regulations while also making sure the UK is “at the forefront” of crypto innovation.
And according to Oliver Linch, CEO of digital asset trading platform Bittrex Global, this trajectory of UK crypto regulation is highly interlinked with that of the EU markets in crypto assets (MiCA) agreed upon last June.
“The UK has for some time stated political ambitions to become a crypto hub within our time zone. And Rishi Sunak is known to be particularly enthusiastic about crypto and allowing the UK to really take a piece of that market share,” Linch told SiliconRepublic.com in an interview.
“But what we’ve seen so far is a higgledy-piggledy bunch of initiatives over the past few months culminating in the consultation paper released at the beginning of February, which set out a framework for a substantive crypto services regulation that will essentially rival or better MiCA.”
Linch explained that the UK has previously followed a “wait and see” approach to crypto, avoiding regulation because that would be potentially tantamount to an endorsement. But that understanding has now changed significantly.
“What’s happened is we’ve seen some high profile negative news affecting jurisdictions where they’ve tried not to get involved. If you don’t create a path for good actors to provide crypto services in a safe, respectable, legitimate, regulated and supervised way, all you really do is clear a path for the bad actors to act badly.”
The UK first committed to introducing a new regulatory regime for crypto almost exactly a year ago to reflect on the “risks and opportunities” the industry represents. Since then, however, the value of cryptocurrencies such as Bitcoin and Ethereum have generally plummeted.
A consultation has now been launched on the proposals that will last until the end of April. The full set of proposals currently under consultation can be accessed on the UK government website. But as with regulation in any nascent financial sector, crypto regulation will take time.
MiCA, for instance, has been delayed several times since it was first proposed.
“It will not come into effect for a year, but I think it’s already having an effect,” Mairead McGuinness, EU commissioner for financial services, told CNBC in December, adding that crypto firms in the continent are “already acting in a way that our legislation is pointing”.
According to Linch, delays such as this are to be expected from the EU because of its size and the number of stakeholders that need to be dealt with when discussing financial proposals.
“France, for example, said that it’s not going to wait, but instead start implementing its own rules right now. Italy is the same. They both want to get a head start on MiCA instead of sitting around and waiting for it,” he explained.
“I don’t know how that’s going to play out, but it makes for an interesting precursor to internal competition we expect to see within MiCA with different member states jockeying for the position to cement themselves as the natural place for crypto, justice within traditional financial services.”
10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.