The UK must establish a joined-up strategy across government, regulators and the legal system if it wants to be a global leader in the crypto sector, says an Innovate Finance report.
In a paper produced by the industry body with Shearman & Sterling for the House of Commons Treasury Committee inquiry into the crypto-asset industry, Innovate Finance argues that the application of digital assets and digitalisation in financial systems and services will create significant, real-life value and benefits.
"There is an opportunity for the UK to benefit from this economic and social value, both domestically and globally," says the paper, adding that the country's position in global finance will be partly determined by its approach to the nascent sector.
This year, Singapore has overtaken the UK as the number two destination for investment in DLT and crypto-asset based businesses.
To fight back and ensure its place at the top table, the country must have a joined-up strategy across government, regulators and the legal system that is alive to the potential benefits as well as the risks of crypto-technologies, and provides clarity for businesses and consumers interacting with them, says the paper.
There must also be a continued review of UK law and regulation to ensure it provides the basis for recognising digital assets and digital transactions, as well as an improvement in the responsiveness and service levels of the UK’s regulators in their processing of applications for new businesses in the sector.
Separately, Ousmène Jacques Mandeng, a visiting fellow at the LSE and blockchain advisor at Accenture, has called for the launch of a CBDC and the issuance of blockchain-based gilts to support the competitiveness of the City of London.
He writes: "The bank introducing a wholesale CBDC and the Treasury announcing that a significant share of gilts will be issued on blockchain could be catalysts for the adoption of blockchain-based financial applications. It may be the nudge the market needs as the benefits will likely go far beyond the City.
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