Cryptocurrency Confusion

The legal status of private cryptocurrencies appears to be in some confusion on both sides of the Atlantic. In the UK a cross-party Treasury Select Committee in a report has called on the government to abandon plans to regulate cryptocurrencies and instead treat them as a form of gambling. The report is not government policy but is damning, saying cryptocurrencies have “no intrinsic value” and “no discernible social good”. In the US a confusing plethora of federal and state agencies regulate private cryptocurrencies. The complex bankruptcy and multi-billion loses of the cryptocurrency exchange FTX last November, and the lawsuit taken out by the Commodity Futures Trading Commission against Binance, the world’s largest crypto exchange at the end of March, alleging that Binance has failed to implement US compliance laws, has unnerved the cryptocurrency world and heightened calls for clearer regulation.

In the UK there is also confusion. The government has set itself the goal of establishing the UK as a hub for cryptocurrency innovation. The Select Committee report is out of step with this. Last week Andrew Griffith, economic secretary to the Treasury and minister for the City, said the government is trying to “make sure the UK is a really good place to do business if you’re trying to take advantage of this amazing world, the whole Web 3.0 that crypto can potentially be a really powerful and enabling technology within.”

The European Council meanwhile has approved the Regulation on Markets in Crypto-Assets (MiCA), the first legal framework for cryptocurrencies in the European Union (EU). This wide-ranging framework will be fully implemented from June/July 2024.