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Sunak's crypto dreams come crashing down - The Telegraph

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Date: 2022-05-22 16:38:15

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Changpeng Zhao, chief executive of Binance, even met with Emmanuel Macron and said the French president made it very clear that he wants to attract crypto businesses to the country and views blockchain as an important sector. 

Meanwhile, in March, the FCA again pushed back the deadline for its so-called temporary registrations regime with only a handful of firms officially registered. 

Yet the evolving political dynamics around the technology could mean the FCA changes its tune. Last week, for instance, the regulator held its first “crypto sprint”, which involved bringing different stakeholders together to discuss the development of future regulations on crypto assets.

Garrick Hilleman, a visiting fellow at the London School of Economics whose research focuses on cryptocurrencies, says while the UK has historically been an attractive hub for fintech companies, there has been a negative turn since Brexit.

“If the Government wants to be home to new innovative sectors, it has to recognise the dangerous turn the UK has taken,” he says. 

Bank of England Governor Andrew Bailey has also issued warnings to banks to be “especially cautious” about holding volatile crypto assets until regulators put new rules in place.

David Mercer, chief executive of LMAX Group, one of the world’s largest institutional crypto exchanges based in west London, says there has been a “divide globally between policymakers and regulators”.

He adds that policymakers generally want to encourage new industries that bring jobs and boost tax receipts, while regulators are in a bind worrying about where the next scandal might arise.

On Friday, the FCA’s Randell warned against the Government rushing to make Britain a global hub for crypto.

He called for “realism” in terms of how long it would take the watchdog to prepare to supervise “purely speculative crypto tokens” and how much crypto companies need to improve before they could be officially authorised.

The hesitation among regulators might not be misplaced given the chaos in crypto markets in recent weeks.    

Last week, crypto assets went into turmoil after Terra, one of the best known stablecoins whose value is supposed to be guaranteed at one dollar, lost more than 85pc of its value. It led to a hasty sell-off in other cryptocurrencies.

More than $300bn (£241bn) was knocked off the total value of all cryptocurrencies during the week, pushing the market to a low not reached in over a year.

Critics of the asset class argue the entire market is something of a sophisticated Ponzi scheme held up purely by its ability to suck in new money. 

Original Source: https://www.telegraph.co.uk/business/2022/05/22/sunaks-crypto-dreams-come-crashing/