The UK's Unrecognized Regulatory Strengths Go Underreported in Global Discussions

Conventional wisdom would have you believe that the United Kingdom is a minnow compared to the likes of China and the United States when it comes to economic size and influence. However, this opinion is far from the truth in the rapidly evolving world of cryptocurrency markets.

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A Global Financial Hub: The UK’s Position

London’s status as a global financial hub gives the UK a significant advantage in terms of regulatory influence. The country’s financial promotion rules are now non-negotiable when it comes to selling fungible, transferable tokens from any country that can affect the UK market. This means that companies looking to enter the UK market must comply with these regulations, which are punishable by up to two years imprisonment and an unlimited fine.

UK Regulatory Superpowers: A Growing Influence

The Financial Conduct Authority (FCA) has recently published guidance that highlights the growing interest in taking action to ensure compliance with UK rules. Firms providing on/off-ramp services to crypto companies engaging in illicit activities could face severe consequences, including losing their banking and payment rails.

Marketing materials promoting investment activity in tokens must be created in accordance with the UK Financial Promotions regime or fall outside of its regulatory scope. This highlights the importance of understanding the complexities of UK regulation for companies operating in the cryptocurrency space.

Growing Regulatory Clarity: A Risk-Based Approach

As regulatory clarity grows, it is essential for cryptocurrency companies to take a risk-based approach when entering new markets and engaging with third parties. The Markets in Crypto-Assets (MiCA) regulation creates several challenges and opportunities that can be approached from a stronger position than many think.

The EU’s MiCA Regulation: Opportunities and Challenges

Although MiCA purports to be a single regime, experience shows that different EU countries will seek to position themselves as the ‘go-to jurisdiction.’ In practice, only a few are likely to emerge as winners. We are already seeing some divergence between EU member states in terms of taxes imposed on crypto firms and the ease with which firms can interact with existing infrastructure.

Non-EU Companies: Choosing the Best Jurisdiction

For non-EU companies, choosing the best jurisdiction is crucial. This requires careful consideration, as advisers in each jurisdiction will seek to sell themselves. The cost differences can be substantial, with companies using strategic solutions to reduce EU access costs by around 90%.

The Cost of Compliance: A Key Consideration

The cost of compliance with MiCA can be minimized, making the UK an attractive location for companies to headquarters their corporate group. The country’s deep network of legal and financial services, world-class universities, and regulatory impact make it an ideal choice.

Collaboration Among Regulators: Setting Common Minimum Standards

Regulators globally are interested in seeing what the UK regulatory position is, and we have seen collaboration among regulators to set common minimum global standards. Companies that take a UK-first approach to their products benefit from an established and robust legal framework internationally recognized by other jurisdictions.

Conclusion

The UK’s hidden advantages in cryptocurrency regulation offer companies a unique opportunity to plan for the future. By understanding these advantages, businesses can make informed decisions about their regulatory strategy and position themselves for success in this rapidly evolving market.

About the Author

Pavan Kaur is a partner at Gunnercooke, serving as a fractional chief marketing officer to crypto companies. Pavan is also a GTM strategy expert for Outlier Ventures’ accelerator programs.

Disclaimer

This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.