The United Kingdom has a golden opportunity to attract Web3 companies that are leaving the United States due to regulatory uncertainties. To make this happen, the UK needs to establish its own regulatory framework that is crypto-friendly. Policy Exchange, a significant conservative think tank, has presented a report with 10 proposals for the UK government to enhance Web3 regulation.
One key proposal from the report is about protecting individuals who own tokens in decentralized autonomous organizations (DAOs) from full legal liabilities. In the US, a recent ruling holds any American who owns or previously owned tokens in a DAO accountable for the organization’s legal violations.
The report also suggests that the UK’s primary financial regulator, the Financial Conduct Authority (FCA), should be more lenient in its Know Your Customer (KYC) approach. They recommend exploring “alternative and innovative techniques” such as digital identities and blockchain analytics tools.
The think tank advises against undermining self-hosted wallets and regulating proof-of-stake services as financial services. Additionally, they propose allowing private stablecoin issuers to store their reserves in the Bank of England. To support the crypto exchange, there’s a suggestion to create a “tax wrapper,” and they propose establishing a new sandbox for experimentation under the Department for Science, Innovation, and Technology.
However, it’s worth noting that recent developments in the UK show a stricter stance on digital assets. The Treasury is considering a ban on cold calls promoting crypto investments, and the FCA has issued warnings to local crypto businesses, emphasizing the need to adhere to marketing rules or face consequences.