Cryptocurrency regulations in the United Kingdom
The United Kingdom has developed new cryptocurrency regulations. The rules have been stricter since the exit of the UK from the European Union when the government created the rules on cryptocurrency. The intention to reduce the investment of assets using crypto avenues. According to the government, this was important in the long-term effort to protect and ensure healthy growth of industries in the UK.
Even though the UK government accepts cryptocurrency exchange as legal, it has issues concerning cryptocurrencies, which has led to several stoppages in the progression of cryptocurrency in the UK. Some of the reasons hindering the government in accepting the new currencies are that cryptocurrency does not have basic features to enable its recognition as money, the government cannot control its monetary policy and crypto can easily be manipulated.
Although cryptocurrencies like Bitcoin and Ethereum can be used in trade exchange, they both lack the features of a unit of account and store of value that money possesses. Cryptocurrencies are formed through codes, and the use of crypto is not bonded to the requirements of government laws and banking systems whose value can be determined.
The store of value of a currency like money enables citizens of a country to participate in productive activities that lead to acquiring, spending and saving the currency without fear of losing the asset. A unit of account that money has can be used to measure the value of commodities involved in the trade. The division of performance can be used to record what debtors owe creditors; it can be used to calculate the currency’s value and predetermine the future that is limited to a period of at most six months. Since cryptocurrency lacks both store value and unit of account, it is almost impossible for the government of the UK to guarantee its citizens the safety of their assets using cryptocurrency.
There is a risk of losing power and authority in managing and controlling monetary policies in the potential case cryptocurrency is widely used. Cryptocurrencies are decentralised systems that are achievable by the use of modern technology and widely accessible via providers such as https://www.okx.com/buy-crypto. Due to decentralisation of the currency, it will be difficult for a centralised authority in the UK to monitor, control and regulate the set laws efficiently. Contributing to this doubt is that the system of cryptocurrency has not run for a long time, and the system cannot be trusted to generate accurate and honest information for the UK government. It has led to the hesitation of the government in accepting cryptocurrency. It will be of vast loss for the government to encourage its citizens to use the cryptocurrency investment of assets, and later the system will fail.
The danger of easy manipulation by cryptocurrency companies to scam UK citizens remains a threat to the government if full use of cryptocurrencies is allowed. It is possible as the industry relies entirely on computers, which are easily deceivable. Moreover, newbies have been at high risk of vulnerable to losses in engaging in cryptocurrency.
However, the UK government legally allows cryptocurrency exchange. The cryptocurrency asset regulations are determined by their type, purpose and nature. To ensure protection against exploitation by cryptocurrency companies, the Financial Conduct Authority (FVA) and Bank of England have set strict rules and guidelines for using cryptocurrency in the UK.
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The material contained in this article is of the nature of general comment only. The financial information is not advice and should not be treated as such.