UK Seeks to Lure Web3 Firms Amid US Regulatory Uncertainty

The United Kingdom has the opportunity to profit from Web3 companies fleeing the United States due to regulatory uncertainty.

According to a think tank, the U.K. will need to pursue its regulatory path, easing the requirements for cryptocurrencies, to achieve this goal.

The influential conservative think tank Policy Exchange published a report on Web3 with ten recommendations for the U.K. government on October 2, claiming that the recommendations would help the country enhance Web3 regulation.

A report proposes limiting the liability of holders of DAO tokens. The report gives a bad example of a recent U.S. ruling that holds any American who currently owns or previously owned tokens in a DAO liable for any legal violations committed by the DAO.

The report also recommends that the primary U.K. financial regulator, the Financial Conduct Authority (FCA), relaxes its current Know Your Customer (KYC) approach to permit the use of “alternative and innovative techniques,” such as digital identities and blockchain analytics tools.

According to the specialists, the United Kingdom should refrain from undermining self-hosted wallets and regulating proof-of-stake services as a financial service.

Other proposals include permitting private stablecoin issuers to store stablecoin reserves at the Bank of England, establishing a “tax wrapper” for crypto exchanges, and establishing a new sandbox under the Department of Science, Innovation, and Technology.

Recently, British regulators have adopted a stricter stance towards the digital asset industry.

His Majesty’s Treasury is contemplating a moratorium on all cold calls promoting crypto investments, and the FCA has issued a warning that local crypto businesses that fail to comply with its marketing rules will face consequences.