Have you come across the term "cryptocurrency" before?
Many individuals may have heard the phrase "cryptocurrency" in the news or through friends and family members who have invested in it. But you're stumped as to what it's all about? Then you've come to the right place.
Let's start with a definition of cryptocurrency. Dissecting the term “cryptocurrency” the word “crypto” signifies secret or hidden, indicating the secured technology that is used to keep track as to who owns what and to make payments amongst users. The word “currency” describes why cryptocurrencies were created in the first place: they are a form of digital cash.
In simple words, it is a type of online payment which can be used to buy and sell services and products. But, it is not the same as the currency we use. They are digital and operate on a peer-to-peer basis.
While cryptocurrency has grown in importance in the global investing scene, nations have tried a variety of ways to regulate it. The United States has yet to build a clear regulatory framework for the asset class, but Canadian officials are taking a proactive approach to crypto.
As for the United Kingdom, the attitude towards cryptocurrency rules has seen to be grown after Brexit. The United Kingdom recognized that crypto assets are property in 2020, however, it does not have any cryptocurrency regulations and does not consider cryptocurrencies to be legal cash.
Because cryptocurrencies lack traditional definitional traits, they are not regarded as "money" by the Bank of England. They do not endanger the banking ecosystem's stability.
Nevertheless, given the legal implications, rules, and status of cryptocurrencies and assets vary based on the type, nature, and application the Bank of England and FCA have provided a set of cautionary statements and recommendations. The position of cryptocurrencies as repositories of wealth, the lack of regulatory and monetary protection, and the hazards of speculative investments and instability are all mentioned in these warnings.
In the United Kingdom, exchanges must be registered. All UK crypto-asset businesses who have a presence or provide services to UK-based customers should register with the Financial Conduct Authority beginning January 10, 2021. These organizations must, above all, adhere to AML/CFT reporting and client protection requirements.
Following the Brexit, the UK's cryptocurrency legislation is anticipated to stay fairly similar with the union, with adopting directives similar to the EU's Markets in Crypto-assets (MiCA) and E-Money initiatives, as well as numerous Payment directives for a while.
In the medium term, once the UK leaves the EU in 2020, its cryptocurrency legislation is anticipated to stay generally consistent with the union, with adopting directives similar to the EU's Markets in Crypto-assets (MiCA) and E-Money proposals, as well as numerous Payment directives.
However, the UK's crypto-regulatory environment is expected to deviate from that of the EU in the future.
