Legal Director at RPC James Kaufman estimates that introduction of UK cryptocurrency regulations could take about two years based on comparable extensions of the FCA’s remit. Furthermore – it is the best-case scenario.
According to the Legal Director, it can take years to make relatively minor regulatory changes to the financial regulatory regime and explained what needs to be done To regulate cryptocurrencies:
- Assess which specific activities related to cryptocurrencies need regulating perhaps with a market study;
- Draft proposed regulations open to consultation;
- After the consultation period has closed, publish changes and set an implementation date;
James Kaufman said, “Even if MP’s latest proposals were fast-tracked, it could still take years for regulations to cover the UK cryptocurrency market that treads the middle ground between protecting retail participants and allowing the UK’s cryptocurrency market to thrive.”[irp]
Brexit occupies a lot of regulator’s time
Legal Director at RPC stated, “Bringing a complex and fast-evolving area like cryptocurrencies into a regulatory framework is going to be a difficult and lengthy process. Added to this, big issues like Brexit are already occupying a lot of regulator’s time.”
Can the FCA handle the expansion?
RPC says the introduction of new regulations would result in a substantial expansion in the role and remit of the FCA. This raises questions over whether the FCA:
- Has the capacity and funding to handle the expansion of its role;
- Has the requisite expertise to regulate a sector as technically complex as cryptocurrencies;
- Is prepared for how cryptocurrency markets may react in response to regulations;
James Kaufmann adds: “The race to establish a workable and regulated regime for cryptocurrencies is surely worth winning as their usage becomes more widespread across Europe and globally. The creation of a cryptocurrency trading hub may also have positive knock-on effects for businesses serving these markets, such as brokers, investment banks, and custodians as well as a potential increase in tax revenues for authorities.”
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