The United Kingdom is actively seeking to regulate the cryptocurrency market and has introduced many new policies to bring different crypto markets under the law. Among the many suggestions that have been made, the most popular is the request to eliminate references to blockchain and Distributed Ledger Technology, (DLT), from the definitions of crypto assets.
BRITAIN SETS OUT PLANS FOR REGULATING CRYPTO ASSETS, PROPOSES TO REMOVE REFERENCE TO BLOCKCHAIN FROM THE DEFINITION OF CRYPTO ASSETS
— *Walter Bloomberg (@DeItaone), January 18, 2022
The Her Majesty’s Treasury has released a new crypto report titled “Cryptoasset promotion: Consultation Response” that noted that although most crypto assets use DLT/blockchain as their underlying technology, this could change as the industry develops. To “future-proof” the definition of innovations, crypto assets should be exempted from DLT reference.
“Most crypto assets use distributed ledger technology (DLT) at the moment. It is possible that this will change as technology and industry develop. The government proposes to eliminate DLT from the definition for qualifying crypto assets.
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The HM Treasury paper discussed the controversial change in the definition of crypto-assets. It also suggested that decentralized finance (DeFi), be brought under regulation on a case by case basis. The government would also closely monitor this fast-growing sector. According to the official paper:
The activities promoted and the way they are carried out will determine whether certain crypto assets lending activities fall within the regulatory scope. This will be a case-by–case decision.
Many crypto advocates believe that the removal of DLT and blockchain reference, as proposed by committee, could pose a threat to the decentralized nature crypto market. The Chinese CBDC eCNY (digital yuan) is based on blockchain technology. However, it’s more private and highly centralized and controlled by the government. The British government appears to be on a similar track with a definition modification.