The United Kingdom’s government has announced its plans to regulate the cryptocurrency market by 2024, in a bid to foster innovation and protect consumers from potential risks. The move comes as the crypto industry is experiencing rapid growth and increasing adoption, both in the UK and globally.
According to a policy paper published by the Treasury, the government intends to introduce a comprehensive regulatory framework for cryptoassets and stablecoins, which are digital tokens pegged to fiat currencies or other assets. The paper outlines the government’s vision for a “safe, open and greener” crypto market that supports financial inclusion, competition and resilience.
The paper also states that the government will consult on the regulation of decentralized finance (DeFi), which is a term for various applications and platforms that use blockchain technology to offer financial services without intermediaries. DeFi has been hailed as a game-changer for the financial sector, but also poses significant challenges in terms of consumer protection, market integrity and financial stability.
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One of the main risks of crypto is its high volatility, which means that the prices of cryptoassets can fluctuate dramatically in a short period of time. This can expose investors to substantial losses, especially if they are not well-informed or experienced. Another risk is the lack of consumer protection, as most cryptoassets are not covered by any compensation scheme or dispute resolution mechanism.
This means that if a crypto platform or service provider fails or is hacked, consumers may not be able to recover their funds or seek redress. A third risk is the environmental impact of crypto mining, which is the process of creating new cryptoassets by solving complex mathematical problems. Crypto mining consumes a large amount of electricity, which can contribute to greenhouse gas emissions and climate change.
The government’s plans are aligned with the recommendations of the Financial Conduct Authority (FCA), which is the UK’s financial watchdog and the main regulator of cryptoassets. The FCA has been warning consumers about the high risks and volatility of investing in cryptoassets, and has banned the sale of certain types of crypto derivatives to retail investors.
The FCA has also been working with international partners to develop global standards and best practices for crypto regulation, as part of the Financial Stability Board (FSB) and the G20. The UK aims to play a leading role in shaping the global regulatory landscape for crypto, and to ensure that its domestic rules are consistent and compatible with those of other jurisdictions.
The government expects to introduce legislation on crypto regulation in 2023, and to implement it by 2024. The timeline is subject to parliamentary approval and consultation with stakeholders, including industry representatives, consumer groups, academics and regulators.
The government hopes that by providing clarity and certainty on the legal status and treatment of cryptoassets, it will encourage innovation and investment in the sector, while also safeguarding the interests of consumers and the wider economy. The government believes that crypto has the potential to transform the way people access and use financial services, and to support the UK’s ambitions as a global leader in fintech and green finance.
Fitzgerald sees spot bitcoin ETF as most-important short-term catalyst, Circle partners with BitoGroup and FamilyMart
The investment bank Cantor Fitzgerald has recently published a report on the prospects of a spot bitcoin exchange-traded fund (ETF) in the US market. The report argues that a spot bitcoin ETF would be the “most-important short-term catalyst” for the cryptocurrency industry, as it would provide a more efficient and transparent way for investors to access the digital asset.
According to the report, a spot bitcoin ETF would have several advantages over the existing bitcoin futures ETFs, such as lower fees, lower tracking error, and higher liquidity. The report also claims that a spot bitcoin ETF would attract more institutional and retail investors, as well as more regulatory clarity and legitimacy for the crypto space.
But what is a spot bitcoin ETF and how does it differ from the existing bitcoin futures ETFs? A spot bitcoin ETF is a type of fund that tracks the price of bitcoin directly, by holding the actual bitcoins in custody. A bitcoin futures ETF, on the other hand, tracks the price of bitcoin indirectly, by holding contracts that bet on the future price of bitcoin.
According to the report, a spot bitcoin ETF would have several advantages over the existing bitcoin futures ETFs, such as lower fees, lower tracking error, and higher liquidity. The report also claims that a spot bitcoin ETF would attract more institutional and retail investors, as well as more regulatory clarity and legitimacy for the crypto space.
The report estimates that a spot bitcoin ETF could generate up to $50 billion in assets under management (AUM) in its first year, based on the historical performance of the gold ETFs and the current market size of bitcoin. The report also expects that a spot bitcoin ETF would boost the price of bitcoin by 10% to 20% in the short term, and by 50% to 100% in the long term.
The report acknowledges that there are still some challenges and uncertainties for a spot bitcoin ETF to be approved by the US Securities and Exchange Commission (SEC), such as the lack of a clear regulatory framework, the volatility and security risks of bitcoin, and the potential market manipulation and fraud. However, the report expresses optimism that these issues can be resolved or mitigated over time, and that a spot bitcoin ETF is “inevitable” in the near future.
The report concludes that a spot bitcoin ETF would be a “game-changer” for the crypto industry, and that Cantor Fitzgerald is “ready to participate” in this opportunity. The report also urges investors to “position themselves accordingly” for this potential scenario.
Circle partners with Taiwan’s BitoGroup and FamilyMart to expand presence
Circle, a leading global financial technology firm, has announced a strategic partnership with Taiwan’s BitoGroup and FamilyMart, one of the largest convenience store chains in the country. The partnership aims to expand Circle’s presence and adoption in the Taiwanese market, where it sees a growing demand for digital currency solutions.
According to a press release, Circle will leverage BitoGroup’s expertise and network in the local crypto industry, as well as FamilyMart’s extensive retail presence, to offer its products and services to Taiwanese consumers and businesses. Circle’s flagship product, the USDC stablecoin, will be integrated with BitoGroup’s BitoEX platform, allowing users to easily buy, sell, and store USDC using local currency. Additionally, Circle will work with FamilyMart to enable customers to purchase USDC at over 3,000 convenience stores across Taiwan, using cash or credit cards.
Jeremy Allaire, co-founder and CEO of Circle said: “We are thrilled to partner with BitoGroup and FamilyMart to bring the benefits of digital currency to millions of people in Taiwan. This is a significant milestone for Circle, as we continue to expand our global footprint and reach new markets. Taiwan is a vibrant and innovative economy, with a strong interest in crypto and blockchain. We believe that USDC can play a key role in enabling more financial inclusion, efficiency, and innovation in this market.”
Titan Cheng, co-founder and CEO of BitoGroup, said: “We are honored to partner with Circle, a pioneer and leader in the global fintech space. We share a common vision of empowering people with digital currency solutions that are fast, secure, and transparent. By integrating USDC with our BitoEX platform, we can offer our users a seamless and convenient way to access the world’s leading stablecoin. We look forward to working with Circle to grow the adoption of USDC in Taiwan and beyond.”
FamilyMart, which operates over 24,000 stores in Asia, said: “We are excited to collaborate with Circle and BitoGroup to bring USDC to our customers. As a leading convenience store chain, we are always looking for ways to enhance our customer experience and offer more value-added services. By enabling our customers to purchase USDC at our stores, we can provide them with a new and convenient option to access the digital economy.”