Days after the UK government announced the establishment of a crypto task force, the City’s Minister John Glen has said that the city could host a “flourishing” crypto exchange if the right level of regulation is found.
At the Treasury International FinTech Conference, the minister gave a speech that recognized the importance of establishing the appropriate regulation that would minimize risk without stifling innovation.
He suggested that cryptocurrency trading at its current level is “not posing any significant risk to the UK economy,” and that “proportionate” regulations could give the local cryptocurrency industry a significant boost. Glen told Business Insider:
“The issue is, how do we regulate or not, how do we enable or not, based on the blend of opportunities and risks that may exist in this new technology… Regulation could be an enabler of a stable, flourishing cryptocurrency exchange in the City of London.”
Although London is home to many blockchain startups, there is currently no large cryptocurrency exchange in the UK market, and investors are often required to convert money into euros or dollars before buying bitcoin.
In other jurisdictions, like British Overseas Territory Gibraltar, lenient regulation has been established in order to attract crypto startups and foster this flourishing industry.
At a global level, there have been increased calls for regulation, including the IMF calling for global co-operation, the SEC cracking down on crypto in the US, and the G20 meeting setting a July deadline for recommended regulation.
News from the UK has been balanced, with Bank of England governor Mark Carney warned that bitcoin looks like a bubble, but also recognized the need for regulation of the space and that the underpinning blockchain technology could transform finance.
On March 22, the Chancellor of the Exchequer, Philip Hammond, announced a new task force including representatives from the Treasury, the Bank of England, and the Financial Conduct Authority, that will be looking in detail at the risk of cryptocurrencies.
With the current uncertainty created by Brexit, Britain is not expected to impose restrictive rules on FinTech, as this might endanger its status as a key financial hub. The UK FinTech sector contributes over £6.6 billion ($9.35 billion) annually to the UK economy, and permissive regulations need to be established in order to keep business in the country when Britain leaves the European Union next year.