May 22, 2024
UK Urged to Relax Crypto KYC for Web3 Leadership over US by Think Tank
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UK Urged to Relax Crypto KYC for Web3 Leadership over US by Think Tank

The United Kingdom has an opportunity to attract Web3 firms that are leaving the United States due to regulatory uncertainty. To seize this opportunity, the UK must chart its own regulatory course, making adjustments to crypto regulations, as recommended by the conservative think tank Policy Exchange.

In their report published on October 2nd, Policy Exchange outlines ten proposals for the UK government to enhance Web3 regulation. One key proposal is to limit the liabilities of individuals who hold tokens in decentralized autonomous organizations (DAOs). This recommendation is in response to a recent U.S. ruling that holds individual Americans who own or have owned tokens in a DAO accountable for any violations committed by the DAO.

The report also suggests that the UK’s principal financial regulator, the Financial Conduct Authority (FCA), should adopt a more flexible approach to Know Your Customer (KYC) requirements. This would involve allowing the use of “alternative and innovative techniques” such as digital identities and blockchain analytics tools.

Additionally, the experts advise against undermining self-hosted wallets and regulating proof-of-stake services as financial services. Other proposals include permitting private stablecoin issuers to store stablecoin reserves in the Bank of England, establishing a “tax wrapper” for crypto exchanges, and creating a new sandbox program under the Department for Science, Innovation, and Technology.

It’s worth noting that recent regulatory developments in the UK have shown a stricter stance towards the digital assets industry. The UK’s Treasury is considering a ban on cold calls promoting crypto investments, and the FCA has issued warnings to local crypto businesses, emphasizing the importance of compliance with its marketing rules to avoid consequences.

Image by vwalakte on Freepik

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