At the annual Hogan Lovells and GBBC Digital Finance Annual Summit on 30 November 2022, Financial Regulatory partner Michael Thomas hosted a wide ranging panel discussion on UK regulatory developments in the crypto and digital assets space, with panellists: Lavan Thasarathakumar (Digital Assets and Blockchain Policy Consultant, Hogan Lovells); Matthias Bauer (Senior Financial Services Expert); Mark Aruliah (Senior Policy Adviser, Elliptic); and Nicole Sandler (Head of Digital Policy, Barclays). We have summarised some of the key talking points from the panel discussion.

The UK regulatory landscape: what’s the current state of play?

An initial observation was made that over the last five years or so, the UK digital assets space has transitioned from a burgeoning industry comprised primarily of smaller FinTech start-ups, to one in which there are now a large number of players (including both FinTechs and more established financial institutions) with a range of different products and business models. However, over the same period, the UK regulatory architecture relating specifically to digital assets has changed very little. That being said, there has recently been more activity and more is on the horizon, with recent HM Treasury consultations concerning stablecoins and the promotion of cryptoassets, as well as the new Financial Services and Markets Bill, which purports to create a new regulatory regime applying to ‘digital settlement assets’. The panellists agreed on the need for new regulation in the sector and that the recent focus by the government and by the regulators is welcome.

UK vs Europe: Who’s Ahead?

With the current state of play in the UK in mind, the panellists moved onto a discussion of how the UK’s current approach stacks up against that of its closest neighbour, the EU 27. It was mentioned that, now that political agreement had been reached on the Markets in Cryptoassets Regulation (“MiCAR”), a new regime relating to cryptoassets in the EU was well on the way to entering into force. The panellists agreed that the EU 27 was ahead of much of the rest of the world in creating a fully comprehensive cryptoasset regime for the EU 27 and that many jurisdictions (the UK included) would be watching closely to see which parts work and which parts could benefit from improvement.

MiCAR: A Welcome Change?

What’s the future for the UK?

What should the regulators focus on?

Regulatory developments concerning blockchain in an FMI context