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FameEX Hot Topics | UK Urged to Ease KYC Rules for Cryptocurrency to Lead Web3 Ahead of the US, Says Think Tank

2023-10-09 16:37:00

Policy Exchange has unveiled a comprehensive report on Web3, offering ten proposals for the UK government's consideration. With Web3 companies leaving the US due to regulatory uncertainties, the UK has a unique opportunity. The report suggests several key measures, including limiting legal liabilities for individuals involved in decentralized autonomous organizations (DAOs) and relaxing Know Your Customer (KYC) norms. It also calls for embracing digital identities and blockchain analytics tools, safeguarding self-hosted wallets, and supporting private stablecoin issuers' reserves in the Bank of England. These proposals aim to strengthen and enhance Web3 regulation in the UK. However, recent regulatory developments in the UK include deliberations on banning cold-calling for cryptocurrency investments and strict marketing regulations for local crypto enterprises.

In a significant move, Policy Exchange, a prominent conservative think tank, has released an extensive report on Web3, presenting a set of ten proposals designed to guide the UK government in navigating the complex landscape of this emerging digital realm. The backdrop for these proposals is the departure of Web3 companies from the United States due to regulatory ambiguities and uncertainties. This presents a golden opportunity for the United Kingdom to position itself as a leading player in the Web3 ecosystem. However, to achieve this, the UK must formulate a distinct regulatory framework, and Policy Exchange's report aims to serve as a foundational guide.

One of the key proposals highlighted in the report pertains to the legal liabilities of individuals involved in decentralized autonomous organizations (DAOs). This recommendation addresses concerns stemming from the US, where any American citizen, irrespective of their current or past DAO token ownership, could be held legally accountable for the actions of the DAO. By limiting such liabilities, the report seeks to create a more favorable environment for Web3 innovation.

Another focal point of the report is the Financial Conduct Authority (FCA), the UK's primary financial regulatory body. It suggests a reevaluation of the FCA's approach, advocating for a relaxation of Know Your Customer (KYC) norms. The report encourages the exploration of "alternative and innovative techniques" such as digital identities and blockchain analytics tools. This move aims to strike a balance between regulatory compliance and fostering innovation within the crypto space.

Furthermore, the report emphasizes the importance of preserving self-hosted wallets and refraining from categorizing proof-of-stake services as financial entities, ensuring that the UK remains competitive and conducive to Web3 development. Among the report's intriguing proposals is the suggestion that private stablecoin issuers should be allowed to store their reserves within the secure confines of the Bank of England. This move could enhance the stability and credibility of stablecoins operating in the UK market.

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