Značka: United Kingdom

UK Treasury wants to remove blockchain reference from crypto definition

The United Kingdom is actively looking to regulate the crypto market and has proposed many new policies to bring various crypto markets under the rule of law. However, among the various newly proposed suggestions, what turned many heads is the request to remove blockchain and Distributed Ledger Technology (DLT) references from the definition of crypto assets.BRITAIN SETS OUT PLANS FOR REGULATING CRYPTO ASSETS, PROPOSES TO REMOVE REFERENCE TO BLOCKCHAIN FROM THE DEFINITION OF CRYPTO ASSETS— *Walter Bloomberg (@DeItaone) January 18, 2022A new crypto report titled “Cryptoasset promotions: Consultation response” from the Her Majesty’s (HM) Treasury noted that, while most crypto assets use DLT or blockchain as an underlying technology, it might change over time the industry evolves. Thus, crypto assets must be exempt from the reference of DLT to “future-proof the definition for innovations.” The official statement said:“Most crypto assets currently use distributed ledger technology (DLT), it might be that this changes as the technology and industry evolve. Therefore, the government proposes to remove the reference to DLT from the definition of qualifying crypto assets. “Related: UK 3rd for ETH ownership as crypto adoption grows 1% in December: SurveyApart from the controversial crypto-asset definition change, the HM Treasury paper also discussed bringing decentralized finance (DeFi) under the scope of regulation on a case-to-case basis and said the government would closely monitor the fast-growing industry. The official paper read:”Whether certain crypto assets lending activities or decentralized finance platforms are within the scope of the regime ultimately depends on the activities being carried out and promoted. As such, this will need to be considered on a case-by-case basis.”Many crypto proponents believe the removal of blockchain and DLT reference as proposed by the committee could cast a danger on the decentralized nature of the crypto market. For example, Chinese CBDC e-CNY or digital yuan is said to be based on blockchain technology, however, it’s more of a private blockchain and highly centralized, controlled by the government. The British government seems to be following a similar path with a definition change.

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UK lawmakers form crypto advocacy group for parliament: report

Lisa Cameron, a member of parliament for the United Kingdom’s House of Commons, is reportedly chairing a lobbying group aimed at promoting crypto-related legislation in government.According to a Friday report from the Financial Times, members of parliament as well as members of the House of Lords in the United Kingdom launched the Crypto and Digital Assets Group to ensure rules for the crypto industry in the U.K. “support innovation” as of last week. The cross-party group aims to protect investors from financial crimes, including token scams or offerings from regulated companies. “We are at a crucial time for the sector as global policymakers are also now reviewing their approach to crypto and how it should be regulated,” said Cameron.Palace of Westminster at night. Source: PexelsThe country’s self-regulating trade group for the crypto industry, CryptoUK, reportedly backed the creation of the advocacy group. According to CryptoUK executive director Ian Taylor, the group intends to spend more than $67,000 in 2022 to support the Crypto and Digital Assets Group, with a focus on “education, education, education” around crypto assets.In 2021, the U.K. Financial Conduct Authority issued numerous warnings to retail investors, advising them of the potential risk of dealing with crypto firms not yet registered with the country’s financial watchdog. The U.K. Advertising Standards Authority, the country’s independent advertising regulator, also removed advertisements from crypto firms including Coinbase and Kraken.Related: Bank of England governor issues crypto investment warningThe seemingly growing concern over crypto scams and illicit transactions in the U.K. comes as a report from Chainalysis showed scammers received $7.8 billion in crypto stolen from victims over 2021, of which more than $2.8 billion came from rug pulls. Chainalysis attributed the prevalence of rug pulls to the “hype around the space” in addition to the lack of code audits for certain DeFi projects.

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UK advertising watchdog bans crypto ads for Coinbase and Kraken

The Advertising Standards Authority, or ASA, the United Kingdom’s independent advertising regulator, has taken down another batch of cryptocurrency-related ad campaigns promoting several major industry firms.On Dec. 15, the advertising watchdog issued several rulings on ad violations involving six crypto-related firms including Coinbase, Kraken, eToro, Exmo, crypto broker Coinburp and Luno crypto exchange. The ASA also issued a similar ruling for pizza chain Papa John’s.All seven ads or promotions were banned for “irresponsibly taking advantage of consumers inexperience and for failing to illustrate the risk of the investment,” the rulings said.The ASA argued that Coinbase’s European branch specifically put out a “misleading” promotion on its paid Facebook ad in July 2021, including a text stating “five pounds in Bitcoin in 2010 would be worth over 100,000 pounds in January 2021.”According to the advertising regulator, the ad “implied there would be a similar guaranteed increase in Bitcoin value over the next decade.” Coinbase Europe also “did not make clear that past performance was not necessarily a guide for the future,” the ASA noted.Another ASA’s ruling was against Kraken operator Payward, related to a digital poster for Kraken seen in August 2021 at London Bridge station. The watchdog argued that the ad lacked a proper risk warning as a risk disclaimer was only shown “for one second.”“The risk warning only ran for one second at the beginning of a 20-second ad and we considered it presented the consumer with a large amount of information that would not be fully read or understood even if it was seen at all,” the ruling reads.Related: UK politicians say cryptocurrency is ‘not an investment’The latest regulatory moves by ASA join a number of similar rulings made earlier this year as the authority has been actively hunting and shutting down misleading crypto adverts.In May, the ASA took down another ad campaign by Luno exchange. The ad was shown across the London Underground network and on London buses this year, with posters including an image of Bitcoin saying: “If you’re seeing bitcoin on the Underground, it’s time to buy.” The regulator previously banned an ad campaign by Coinfloor exchange.

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Point of no return? Crypto investment products could be key to mass adoption

The first Bitcoin (BTC) futures exchange-traded fund (ETF) was launched in the United States back on October 19, 2021. Since then, a number of other cryptocurrency investment products have been launched in various markets.That first ETF, the ProShares Bitcoin Strategy ETF, quicklybecame one of the top ETFs of all time by trading volume on its debut, and soon after, several other Bitcoin futures ETFs were launched in the United States, providing investors with different investment options.To Martha Reyes, head of research at cryptocurrency trading platform Bequant, these options are important. Speaking to Cointelegraph, Reyes pointed out that in traditional finance, ETFs have “proved to be incredibly popular in recent years, with ETF assets expected to reach $14 trillion by 2024.”Reyes said that investors who have been on the sidelines of the market may now choose to invest in cryptocurrencies if they prefer the “low cost, flexibility and convenience [of ETFs], especially as they then do not have to custody the crypto themselves.”Custodying crypto assets, Reyes said, can prove a “technical barrier to some non-crypto natives.” The launch of crypto ETFs may offer investors the type of diversification they want in their portfolios through crypto, although some may want to access the market “via baskets reflecting different trends in this rapidly evolving market.” She added:“Others prefer to be more hands on or have a combination of strategies. The important thing is that investors have options.”Several options have, in fact, been launched over the last few weeks. United States-based firm WisdomTree has listed its cryptocurrency exchange-traded product (ETP), Crypto Mega cap Equal Weight ETP, on Euronext exchanges in Paris and Amsterdam.Trading under the ticker symbol MEGA, the product is backed by physical cryptocurrencies including Bitcoin and Ether (ETH) and is rebalanced quarterly.WisdomTree also launched its WisdomTree Crypto Market (BLOC) and WisdomTree Crypto Altcoin (WALT) ETPs in Europe.Similarly, in December, Bitcoin Capital AG released two ETPs on the SIX Swiss Exchange, offering investors exposure to Bitcoin and Ether. These products are actively managed by FICAS AG and are available to institutional, professional and private investors.These products have so far been successful and more options are being launched on a regular basis, effectively boosting investors’ options in the market. To some experts, these products are part of the next step cryptocurrencies need to take to be widely adopted.Investment products and adoptionTo Reyes, participation in these investment products is so far “primarily institutional,” especially in countries like the United States in which only futures products are trading. She said that retail investors “are cognizant of the added rollover costs of a future versus a spot ETF, meaning underperformance versus the underlying.”Reyes added that for “wide retail participation, we would probably need to see a spot product.”Speaking to Cointelegraph Sui Chung, CEO of FCA-regulated crypto indices provider CF Benchmarks, said that cryptocurrency investment products are “significant drivers of mass adoption,” and while the firm would “like to see a wider choice of avenues” the impact of these products could still be significant:“We shouldn’t underestimate the impact these products have in bringing new investors and capital to crypto assets and how this can accelerate long-term adoption.”Karan Sood, CEO and managing director at Cboe Vest, an asset management partner of Cboe Global Markets, told Cointelegraph that increased participation from a diverse set of investors is “good for the market,” as it “increases liquidity and helps build out the market infrastructure.”Sood said that before investing, investors should review their possibilities carefully as some products were initially launched to provide investors access to the cryptocurrency market, while others “try to provide a solution to Bitcoin’s extreme volatility problem.”According to Sood, volatility is “endemic to the crypto asset space,” and sell-offs in which Bitcoin and other crypto assets lose over half of their value are fairly common, so much so that drops of over 20% are to be expected. He added:“However, what is new is the availability of funds that allows investors to access Bitcoin exposure with strategies designed to reduce the impact of severe sustained declines.”These funds, he said, take the “managed volatility set of investment strategies extensively used in conventional asset classes” and apply them to Bitcoin futures to protect investors against the cryptocurrency’s volatility.This volatility is believed to be keeping some institutional investors on the sidelines and stopped regulators like the U.S. Securities and Exchange Commission (SEC) from finding ways to properly protect investors and accommodate for the innovation in the space.To Chung, the cryptocurrency market has matured to the point there are now “core” exchanges like Coinbase and Kraken that ensure fair and manipulation-free trading, so market manipulation should not be a problem. Regulated products are, nevertheless, preferable for institutions and more conservative investors.Considering the lack of a spot Bitcoin ETF in the U.S. and the disadvantages of futures-based products mentioned by Reyes above, retail investors are left either gaining exposure from other markets or buying crypto directly. These options are, nevertheless, not optimal for some.Early stages for crypto investment productsBuying cryptocurrencies on the spot market has been the go-to strategy for most crypto investors over the last few years, but more conservative investors who may want to diversify their portfolios may be uncomfortable with the lack of regulation in the market.As Cboe Vest’s Sood put it, when compared to the “trading and custody infrastructure that exists for conventional assets such as stocks, bonds and funds, there is little in the form of regulation.” This lack of regulation, he said, has been “exemplified by the persistent news about the loss of keys, hacking of systems and fraud in trading in crypto assets.”Bitcoin futures investment products operate under the Commodity Futures Trading Commissions’ regulations, while mutual funds with exposure to Bitcoin are actively managed by regulated entities with a rich history of providing strong investor protections.Taking into account these differences, Sood pointed out that “unless there is a change in the regulation of spot Bitcoin, there is a sound basis for BTC futures-based investments but not for spot-based investments.”Notably, spot Bitcoin ETFs are available in various jurisdictions. In December, Fidelity Canada launched one such product called the Fidelity Advantage Bitcoin ETF. It trades on the Toronto Stock Exchange and is denominated both in Canadian and United States dollars.Sood said that regulations in the U.S. may be a burden for investment product manufacturers but have “delivered substantial value and protections to U.S. investors over the years.” These protections, he said, have “stood the test of time over decades” and, as such, investors should opt for products regulated in the country if possible. While futures-based investment products may not be optimal for retail investors, Sood argued that some sophisticated products have been launched to offer investors the cryptocurrency exposure they may be looking for. He concluded:“Investing in funds overseas may expose U.S. investors to undue unique risks and tax burdens.“Bequant’s Reyes pointed out that cryptocurrency ETFs have less than $20 billion in assets under management across 50 products, which means we are “still in the early stages of the adoption” of these products.Nevertheless, she sees the approval of a futures ETF and rejection of a spot ETF as “inconsistent,” as in other jurisdictions, spot ETFs are already being traded. Making matters worse, a futures product “primarily benefits institutional investors as it is too expensive for individual investors.Grayscale Investments has notably fired back at the SEC for rejecting VanEck’s spot Bitcoin ETF application, issuing a letter arguing the SEC is wrong to reject such products after approving several Bitcoin futures ETFs.CF Benchmarks CEO Sui Chung said that while futures products are regulated instruments with oversight from the CFTC, it “isn’t so clear cut for spot Bitcoin,” and the SEC has a challenge in balancing its enforcement mandate with what U.S. investors want.However, Chung noted that Bitcoin futures ETFs have already “sparked an irreversible change” as they are available “to every single member of the investing public in the world’s deepest capital market.”Markets, he said, haven’t experienced significant disruptions and “the sky hasn’t fallen in,” meaning that we “have passed the point of no return.” To Chung, firms who can offer investors ETFs that can help diversify and grow their portfolios “will be the winners.”Making crypto more accessibleA Bitcoin spot ETF could make cryptocurrencies more accessible but to the above experts, the crypto ETF is about more than a product with physical exposure — it’s about making cryptocurrency exposure more accessible.To Reyes, futures ETFs trading in the U.S. are a “trial run in eventually approving a spot ETF.” Such an ETF, she concluded, would be greatly beneficial:“A spot Bitcoin ETF would fuel mainstream retail adoption of Bitcoin further. Some investors prefer the ease of accessing the market this way rather than through dedicated crypto exchanges.”Reyes welcomed regulation, noting that the more regulated fiat-to-crypto on-ramps there are the better, as these platforms can help signal regulatory concerns are easing, further driving up demand for cryptocurrencies.Chung said that cryptocurrency investment products can lead to mass adoption by ensuring that investors deal with less friction when entering the market, as it may be easier to buy an ETP via an existing brokerage account than to open an account at a cryptocurrency trading platform:“We don’t want to be dogmatic about how people invest and learn about crypto and its possibilities, our job is simply to open up as many avenues as possible and drive adoption.”While it isn’t clear when the SEC will approve a Bitcoin spot ETF or whether existing solutions are enough for more conservative investors to make a move, new investment products are making it easier for investors to gain exposure to the space.Over time, the trend should continue and new products will launch, allowing cryptocurrencies to fully develop in the market as a new asset class that could help hedge against inflation or economic downturns.

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UK politicians say cryptocurrency is ‘not an investment’

Members of Parliament (MPs) in the United Kingdom have called upon the Financial Conduct Authority (FCA) to limit the use of the word “invest” and “investment” by cryptocurrency firms for promotional purposes.According to a Dec. 9 report in The Times, MPs at the treasury select committee told FCA chief Nikhil Rathi that the use of the word “your investment” often portrays that these are on par with an FTSE 100 company or a unit trust, thus giving the wrong impression about the type of investment. Harriett Baldwin, Conservative MP for West Worcestershire took special exception to FCA’s supposed inability to stop fraudulent promotions and went on to accuse them of helping criminals:“Your website actually publishes a list of unregistered crypto-asset businesses for anti-money laundering purposes. It’s meant to be helpful but it could also be helpful to someone who just wants to launder money.”Rathi assured that the regulatory body is currently looking into the matter and also expecting new powers in terms of regulating crypto advertisements. However, unless those new powers come into practice, there isn’t much that the chief regulatory body can do.“We’ll have a discussion about what the wording should be,” said FCA chief.Earlier, FCA chairman Charles Randell had expressed concern over the wordings of the Floki Inu advertisement on London buses but admitted nothing much can be done beyond cautionary warnings for consumers.The FCA chief also said that the agency is considering dismissing any requests for compensation under the Financial Services Compensation Scheme if people lose money in cryptocurrencies: “Personally, I would suggest we simply say that anything crypto-related should not be entitled to compensation so that consumers are clear about that when they are investing.”Related: UK FCA will spend £11M to warn people about investing in cryptoIn July 2021, the Advertising Standards Authority in the U.K. issued a red alert against deceptive crypto advertising and warned consumers to be wary of such ads.Apart from the U.K., India is another country where authorities have had to get involved over the lack of disclaimers in crypto advertisements. The Delhi High Court recently issued a notice to bring standardized disclaimers for crypto advertisements.

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