Cryptocurrencies are one of the youngest asset classes in the world, yet they’ve undoubtedly taken the world by storm over the past few years. There are many reasons for this, ranging from the hype created around them to the fact that the coins are famously censorship-resistant and easily accessible. While not traditionally accepted in the world of traditional finance, cryptocurrencies have become more and more important, leading lawmakers to consider the different ways in which their volatility can be mediated so that they can be safely integrated into the world of standard finance. Specialised exchanges such as Binance have gradually noticed that investors are increasingly interested in buying Bitcoin.
Image source: https://unsplash.com/photos/SFpznfL4hnw
Countries worldwide have had different responses towards cryptocurrencies, ranging from universal acceptance to imposing a series of restrictions and bans. Some, such as El Salvador, have adopted cryptographic coins as legal tender, a move that was met with mixed results and reactions from the global community. Others, like China, were prominent players in the crypto ecosystem until they decided to cut ties with the world of digital assets. In 2021, China banned all crypto mining and training, ceasing all operations immediately. Several years before, in 2013, regulators established that Chinese banks were not allowed to accept crypto in any form.
A large part of the mining process was taken up by the United States, with Texas bearing a large part of it and Kazakhstan as two of the world’s largest mining hubs. A large mining facility based on hydropower was recently discovered in Bhutan as well. Japan is widely recognised as one of the nations that took some of the greatest leaps in crypto development, recently announcing a white paper aimed at fuelling technological development, while Thailand banned meme coins after declaring that they have no particular economic value. Crypto investments also remain popular in South Korea, particularly among the younger generation, with many seeing it as an answer to the high unemployment rates.
So, whether a country opens crypto with open arms or is taking a more cautious approach, one thing’s for sure: none remain indifferent. In the UK, buying and holding crypto is perfectly legal, and while it isn’t currently classified as a currency, it is nevertheless regarded as a property asset. Several crypto-friendly banks operate in the country, which means you can buy, sell and hold cryptocurrencies, particularly Bitcoin.
The cryptocurrency ecosystem has been at the centre of an onslaught of regulatory movements to eliminate the crypto environment’s unsafe aspects. However, this movement resulted in several exchanges and banks having to cease all operations, and the customers were faced with considerable losses. While regulatory efforts have so far been centred in the United States, the UK recently announced a series of its own rules, set to be imposed over the next twelve months.
The plan to enforce regulations in the crypto market comes in the wake of several exchange collapses over the past year that left many investors struggling to protect their holdings. The strategy hasn’t yet been fully outlined, and some aspects might change over the next few months until a definitive white paper is announced. However, many don’t expect the measures to be too harsh, especially considering that incumbent Prime Minister Rishi Sunak has previously expressed a crypto-friendly stance. Others, however, want to see how everything will develop before voicing their opinion.
One of the proposed moves is to strengthen the rules pertaining to intermediaries, particularly those that serve as custodians and store the crypto of several investors. In 2022, the UK digital asset market saw an increase in the use of risky loans in which due diligence wasn’t necessarily used. The measures would, therefore, aim to strengthen the rules around consumer protection, as well as help companies become more resilient.
Although the move might seem negative, it aims to enable the cryptocurrency market to develop well. Recently, Treasury officials have expressed the belief that the economic sector must be supported in its development. This includes assisting all technological developments, meaning the cryptocurrency market is directly included. However, lawmakers also believe that consumers must receive extra protection, and there must be legislation that guarantees that fair standards and transparency will be employed at all parts of the transactional process in order to provide better stability to the crypto environment.
The practice of cold calling involves business and sales solicitations from salespersons you’ve had no previous interaction with. Usually, the exchange occurs via phone, but door-to-door interactions are common, too, albeit more rarely. Although it is a legitimate business tool, it is also one of the favourite methods of scammers looking to gain profits through illicit means.
Now, cold calls aiming to sell financial products, including crypto, are to be entirely banned to tackle financial fraud within the UK. More than 40% of illegal activities in the United Kingdom are directly associated with fraudulent activities. These illicit activities cost the government a whopping seven billion pounds each year.
This comes in the context of a steep increase in crypto-based scams. The figures show that since 2021, the number has risen by nearly 200%, with the pig-butchering scheme, which involves the scammer reaching out and getting close to the victim to gain their trust in order to extract their funds, mainly through the use of dating apps becoming increasingly more popular. This scheme works so well because it takes a long time, often several months, during which the victim is manipulated into providing a lot of personal information about themselves.
The Us Department of Justice seized seven sites that carried out pig-butchering schemes at the end of 2022, but there are undoubtedly many more out there. In the UK, the ban on these products is meant to stop at least some of these scams and provide a safer environment for traders.
Cryptocurrencies have become more and more popular all over the world. The UK is set to become a hub for crypto tech development, yet they want to do it in a way that’s sustainable and ensures secure development over the years.