The British Government Is Funding Stablecoin and CBDC Research

Key Takeaways

  • The U.K. has awarded one of its most prestigious R&D grants to distributed ledger technology company Millicent.
  • Millicent is working on a project centered around stablecoins and CBDCs.
  • The U.K. joins several other nations researching central bank-backed digital currencies.

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The United Kingdom has awarded one of its most competitive research and development grants to Millicent, a stablecoin and central bank digital currency project. It is the first CBDC and stablecoin project funded by the British government.

Government Funds CBDC Project

The British government has awarded a highly sought-after grant to Millicent, a company researching stablecoins and CBDCs. It is the first stablecoin and CBDC project to be awarded funding by government of the U.K.

Millicent is the recipient of the U.K. Research and Innovation (UKRI) Innovate UK SMART Award, a highly-coveted grant sponsored by the Department for Business, Energy and Industrial Strategy (BEIS). Millicent’s project was chosen because, according to its assessors:

“Millicent is a game-changing project that could change the way we bank and spend; [its] impact could be very significant to the U.K., financially, socially, and technically, as it can lead the way for a U.K. system backed by the Bank of England.”

Millicent is the nation’s only government-backed stablecoin and CBDC project. The company’s stated purpose is to help bring digital finance to the masses and claims its network can process 10,000 transactions each second. It is led by a former Wall Street banker, Stella Dyer, who said:

“In today’s system, it’s usually the people with the least money who pay the most for financial services. Millicent is designed to level the playing field for everyone, creating an ‘Internet of Value’ that is open and accessible to all.”

The Bank of England and Her Majesty’s Treasury announced last November next steps in its own CBDC plans that could lead to a rollout later this decade. Many nations have given attention to central bank digital currencies, including the United States, Malaysia, Mexico, South Africa, Singapore, Australia, and Canada, with others like Nigeria, China, and the Bahamas having already launched one.  

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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U.K. Government to Crack Down on Crypto Advertising

Key Takeaways

  • The U.K. Government published plans today detailing its plans to impose greater restrictions on cryptocurrency advertising.
  • The proposed legislation would subject cryptocurrency promotions to the same rules that other financial advertisers must obey.
  • The crackdown comes amid Members’ of Parliament calls for increased regulatory oversight on digital assets.

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The Government of the United Kingdom has published its plans to impose stringent restrictions on cryptocurrency advertisements. The strengthened rules focus mainly on misleading claims in adverts that might cause consumers harm.

Regulatory Landscape Continues Taking Shape

Her Majesty’s Treasury is clamping down on misleading marketing.

The Treasury of the United Kingdom published the government’s plans for legislation surrounding misleading cryptocurrency promotions today. While the government body emphasized its willingness to encourage innovation, it seeks to regulate cryptoassets under the same standards as other forms of financial advertising. 

The Financial Conduct Authority of the U.K. already has strict standards by which financial promotions on other instruments like equities or insurance products must abide. The Treasury’s outlined plans involve amending the Financial Promotion Order to include digital assets within the purview of the existing financial promotion regimes.

The Financial Services and Markets Act of 2000 bars businesses from promoting financial instruments without approval from the Financial Conduct Authority or the Prudential Regulation Authority, yet the FCA currently is limited in its authority to regulate cryptocurrencies. 

According to the Treasury’s announcement, the FCA “will shortly be consulting on their proposed financial promotions rules that will apply to cryptoassets,” and this legislation will appear before parliament when “parliamentary time allows.”

The Treasury cited increasing popularity of cryptoassets among U.K. citizens coupled with decreasing understanding of what cryptocurrency actually is as evidence of consumers’ vulnerability to scams and fraud.

The plans announced today did, however, take care to acknowledge the need to foster innovation. Chancellor of the Treasury Rishi Sunak noted the “exciting new opportunities” that cryptoassets might offer consumers, but highlighted the need to protect consumers from “being sold products with misleading claims.” 

Other countries have also instituted similar changes—just yesterday, Spain announced new rules for cryptocurrency advertisers.

The move takes place in the wake of increased calls for scrutiny over the emerging digital assets space. On Jan. 4, iNews published a report detailing the grumblings from Members of Parliament pushing for increased regulatory oversight over the space.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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U.K. May Toughen Crypto Regulation in 2022: Report

Key Takeaways

  • Members of Parliament in the U.K. are pushing for increased regulatory oversight of crypto assets this year.
  • The regulatory crackdown is primarily focused on how NFTs, in particular, are allowed to be promoted and advertised.
  • Bodies like the Financial Conduct Authority, the Treasury, and the Advertising Standards Authority all have plans for upcoming rules and guidance.

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Cryptocurrency and NFTs might face a regulatory crackdown in the U.K. this year, if certain Members of Parliament have their way. 

Regulatory Landscape Takes Shape 

The New Year has brought with it some more regulatory uncertainty, which might come as no surprise to many. 

Members of Parliament and campaigners in the United Kingdom are pushing for ministers and regulatory agencies to establish a more hardline stance on cryptocurrency and NFTs in 2022— especially in terms of how such assets can be promoted—according to a report from iNews. 

The M.P.s are reportedly focused on the promotion of crypto products like “fan tokens” and digital artworks by entities like soccer clubs or online influencers, with Conservative M.P. Richard Holden referring to the landscape as the “Wild West” and calling for “clear differentiation” between financial instruments and products that are more akin to gambling. 

The Financial Conduct Authority will likely also make a push for additional oversight powers over digital assets, having warned investors before to “be prepared to lose all their money.” Currently, the FCA can only act on crypto regulation in conjunction with money laundering and anti-terror laws. 

The Treasury is likewise concerned with the fairness and clearness of crypto asset promotions and the potentially “misleading” form these promotions might take. It plans to respond to a 2020 consultation on best practices for crypto industry regulation. 

Former Jeremy Corbyn aide Matt Zarb-Cousin remarked on what he deems as unsavory marketing by soccer clubs that “could lead to people destroying their lives” under a false “pretence” of empowerment. 

While there is no one authority with dominion over crypto regulation in the U.K., the country’s Advertising Standards Authority has clamped down on certain promotional practices. Last month, the ASA told the Arsenal soccer club that they could no longer run advertisements for its NFTs that are of the same nature as those it ran in August. 

The ASA has plans to bring forth updated rules for how companies can market crypto assets. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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Binance Promises Legal Compliance For U.K. Comeback

Key Takeaways

  • Binance is seeking an FCA license to operate as a fully regulated exchange in the U.K, CEO Zhangpeng Zhao revealed Saturday.
  • The company has reportedly made “substantial changes in organizational structures” and hired several ex-regulatory staff from the country to enhance compliance.
  • Binance has also considered creating a separate legal entity in the U.K.— similar to its BinanceUS subsidiary.

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Binance is ramping up compliance efforts in hopes of getting regulatory approval to operate in the U.K.

Binance Seeks Regulatory Approval

The world’s largest crypto exchange, Binance, is working towards acquiring a Finacial Conduct Authority (FCA) license, months after the watchdog barred the firm from operating in the country. 

In a Saturday interview for The Telegraph, Binance CEO Zhangpeng Zhao said that the exchange is making “substantial changes in organizational structures” in an effort to expand its operations in the U.K. and obtain regulatory approval in the next six to 18 months. “We want to continue to establish a presence in the U.K. and serve U.K. users in a fully licensed and fully compliant manner,” he said.

Back in June this year, the FCA clamped down on Binance, ruling that the exchange “is not permitted to undertake any regulated activity in the U.K.” Now, Binance is reportedly working towards rectifying that ruling by establishing an office with a “number of ex-regulatory staff from the U.K.” and a “couple of hundred compliance people” in the country.

To become a registered crypto exchange in the U.K., Binance must abide by the country’s money laundering and terrorist financing controls. To do that, the firm was reportedly considering setting up a separate legal entity in the U.K.—similar to what it has already done in the U.S.

Since it launched in 2017, Binance has been operating under a “decentralized model,” with many employees and offices scattered around the world and no official company headquarters. This approach, however, hasn’t faired well with the regulators. Over the last year, several countries this approach unacceptable and barred the exchange from operating within their jurisdictions.

Consequently, Binance had to step away from this model and start following the playbook to appease regulators. “We understand that now. So now we’re in the process of setting up real offices, legal entities, a proper board, proper governance structures in most places, including the U.K.,” Zhao told the newspaper.

With approval from the FCA, Binance could reestablish its presence in the U.K. and improve its image as a cooperative and compliant crypto exchange globally.

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