On 10 March 2022 I had the pleasure of speaking at a webinar hosted by the SEC Newgate Crypto Team, the topic of which was: “How the UK should shape its crypto regulations”:
As a legal practitioner whose professional caseload often involves the cryptosphere, I found the discussion and different perspectives voiced by the panel and audience enormously interesting. I greatly benefited from the viewpoints of my fellow panellists who were Ian Taylor, CEO of Crypto UK, George McDonaugh, co-founder of KR1 plc, Shiv Malik, CEO of Pool, Ian Silvera of SEC Newgate and of course our able chair, Billy Bambrough of Forbes.
Key insights
For me, the most interesting points made in the discussion were:
- British entrepreneurs who would prefer to set up businesses in Britain are setting up their companies in Gibraltar, due to a perceived lack of regulatory certainty as to the regulation that they will be subject to in this jurisdiction.
- Talk of the use of crypto to facilitate sanctions evasion is misplaced, due to the relative lack of liquidity and adequate levels of regulatory oversight of the traditional banking system, which is the gatekeeper to the cryptosphere; and
- The emphasis on personal responsibility that those in the cryptosphere consider to be one of their core values, which results in a relative lack of empathy towards the victims of even the most sophisticated scams.
Outside the UK
Of course, with the on-going invasion of Ukraine in everyone’s thoughts the discussion touched on the role that crypto has thus far played. Crypto has helped to fund the Ukrainian defensive efforts and provide an alternative banking system to refugees and people in Ukraine who are no longer able to access their banks. This is crypto’s first war, and thus far it is acquitting itself creditably in showing that it is there to help victims of catastrophic, systemic financial failures as in Ukraine as well as those who are exposed to long-term economic instability – such as the people of Argentina, Turkey and Nigeria.
Recently Stripe announced that their platform will offer its customers support for payments in crypto and NFT transactions. Similarly, Binance have recently announced their intention to acquire non-crypto businesses to build an old-fashioned conglomerate aimed at (in their words) “making the crypto industry bigger”. We can expect other large, financially successful crypto businesses to do the same in the future.
Mixed messages from Britain
Despite the clear evidence that it is only a matter of time before crypto becomes fully mainstream, there are disappointingly mixed messages being sent to the cryptosphere by UK plc.
Mainstream banks frequently refuse to allow retail customers to use their cash to interact with the crypto world, including institutions as diverse as Monzo, Coutts and Revolut, prompting crypto enthusiasts to switch banks.
In a similar vein, the FCA recently ordered the closure of all Bitcoin ATMs in the UK. A sadly blunt and retrograde step.
UK plc has, thus far, adopted a wait-and-see approach to crypto regulation. That approach has in some respects been proven to be correct – had we legislated in the period prior to 2020, the legislation may not have considered DeFi, DAOs or even NFTs.
However, there are growing signs that Britain is losing the race between major economies, and there needs to be a serious, holistic approach from government to show that Britain has a seat at the crypto table.
We can help
The regulatory regime which applies to crypto assets is complex and dynamic. A thorough understanding is needed to minimise the risk businesses face in this space.
Rosenblatt (and sister brand Memery Crystal) advise on all aspects of crypto assets and regulatory law. We can help successfully navigate companies through obtaining the necessary registrations/authorisations from the FCA for their operations. We can also work with you to provide the required AML and other policies needed to support your application to the FCA.
Our dispute resolution experts at Rosenblatt provide pre-emptive advice, advise on negotiations, taking injunctive action and undertaking investigations. We act in litigation, arbitration, and tribunals, advise on alternative dispute resolution and in regulatory or white-collar criminal proceedings.
Contact us
If you are interested in the issues outlined above, please get in touch with me at tom.spiller@rosenblatt-law.co.uk or my colleague partner Laura Clatworthy who heads our Tech Team. Rosenblatt has a wealth of experience advising businesses and individuals on the legal and regulatory aspects of cryptocurrencies. If you would like to participate in future discussions hosted by Rosenblatt in this exciting developing area, please let us know.
Author
Tom Spiller, Senior Associate (tom.spiller@rosenblatt.co.uk)
