There appears to be growing global concern over the volatility of the digital asset industry, and the demand for regulatory clarity is growing.
EU and UK Divided on Crypto Laws
According to reports, the United Kingdom and European Union (EU) do not agree on how they should regulate crypto. Meanwhile, the UK Parliament is reportedly working on a new bill for the digital financial ecosystem.
However, the new Financial Conduct Authority (FCA) guidelines oversee high-risk investments. On the other hand, Europe is developing its Markets in Crypto Asset Regulations (MiCA) bill for the whole bloc.
Furthermore, the UK wants to begin by regulating specific digital assets and services providers within its jurisdiction. At the same time, Europe’s MiCA rules are broad regulations covering all crypto assets.
The UK only takes one step at a time regarding digital asset guidelines. Still, it has previously announced a bill to regulate stablecoins for payments within the UK.
Meanwhile, the focus in the EU regarding MiCA is investment-driven, implying the need to create more crypto tokens. In addition, the EU proposes providing the white paper for developing new digital coins.
Can MiCA be the Answer for Crypto Investors?
Considering how essential regulations are to investors, the question is: Will MiCA favor crypto investors? One can find the answer on both sides of the divide.
The differences in regulations between the EU and UK also extend to crypto s providers operating in the two territories. Moreover, the UK intends to focus on a few aspects of the industry, like exchanges and custody of digital currency.
The EU, on the other hand, wants to use MiCA to cover the entire operations of the cryptocurrency industry. In addition, MiCA will also cover custody and crypto exchange.
Moreover, the UK wants to focus on investment risk warnings to educate investors and protect their funds from loss. The one worrying aspect of this is that investors find it challenging to understand the UK’s motive.
Investors want a cover that protects their investment in crypto assets, considering the market’s volatility. Furthermore, the effective regulation of the industry will ensure stability and strengthen the sector’s performance.
With rules comes clarity for innovations to thrive, as people need to understand what they are a part of. It will also clear the air on the uncertainty surrounding specific tokens.
The impact of cryptocurrency on mainstream financial institutions is enormous, and only clear and concise regulations can shed more light on gray areas. However, achieving comprehensive rules is still a long way off for the industry.
Accordingly, the latest FCA rules address the risks associated with crypto investment. However, regular supervision from the regulators is the key to ensuring its effectiveness. This is because crypto assets are not covered by deposit insurance.
In conclusion, both the EU’s MiCA and the UK’s FCA will impose liability on service providers in cases of custody losses of funds.
