UK needs to address KYC requirements to surpass US in Web3 – imagine
The UK stands to benefit from the regulatory uncertainty of Web3 companies leaving the US. But to achieve that, the UK should adopt its own regulatory approach, softening the requirements for crypto in some cases, according to the think tank.
On 2 October, the influential conservative think tank Policy Exchange on Web3 published a report with 10 proposals for the UK government, which it said would help the country improve Web3 regulation.
One proposal in the report is to limit the liability of individuals who hold tokens in a decentralized autonomous organization (DAO). The report cites the negative example of a recent ruling in the United States that holds any American individual who owns or previously owned tokens in a DAO liable for violations of the law by the DAO.
Related: UK to launch digital securities sandbox in Q1 2024
The report also addresses the approach of the UK's main financial regulator, the Financial Conduct Authority (FCA), to Know Your Customer (KYC), which allows the use of “alternative and innovative techniques” such as digital identities and blockchain analysis tools.
Experts say the UK should avoid deregulation of self-hosted wallets and shareholding services as financial services. Among other proposals are allowing private stablecoin issuers to deposit stablecoins in the Bank of England, creating a “tax wrapper” for crypto exchanges and creating a new sandbox under the Department of Science, Innovation and Technology.
Recently, UK regulators have taken a more stringent approach to the digital assets industry. Her Majesty's Treasury is considering banning all cold calls promoting crypto investments, and the FCA has warned local crypto businesses to follow its trading rules or face consequences.
