US, UK lawmakers to discuss crypto regulation on June 13

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Amid increasing regulatory challenges faced by the cryptocurrency sector, lawmakers in the U.S. and U.K. are taking the discussion to the public domain on June 13, where both nations will hold high-profile hearings to discuss the regulation of digital assets.

The Crypto and Digital Assets All-Party Parliamentary Group (APPG) report on the necessity of cryptocurrency regulation will be debated in the U.K. Parliament. The discussion, led by APPG Chair Dr. Lisa Cameron MP, is scheduled to commence at 11:00 a.m. BST.

Later in the day, the House Committee on Financial Services in the United States will conduct a hearing titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem” at 2:00 p.m. ET.

The hearings aim to direct the attention of the public and lawmakers toward digital assets, the potential benefits and risks and the government’s role in regulating them.

Crypto as financial services

The APPG for crypto assets, comprised of 15 members of Parliament and Lords, released a report on Monday that supported the U.K. government’s proposal to treat crypto as regulated financial services.

“The APPG supports the position of HM Treasury that cryptocurrency and digital assets are best regulated, in so far as is possible and appropriate, within existing and new financial services regulations, which has a track record in mitigating risks to consumers and investors,” the report said.

APPG Chair Lisa Cameron listed the reasons why the group supports the government’s position to treat crypto as financial services, including tax collection.

“I like people to pay tax when they make gains in the U.K. and it’s very important that that’s harnessed and that can only be achieved under the financial services regulation rather than gambling,” said Cameron.

“The other reason crypto should be treated like a financial service is so that the U.K. has commonalities with other jurisdictions when it comes to their financial services regulations.”

Sheldon Mills, the FCA’s executive director of consumers and competition, highlighted that individuals have the autonomy to decide whether to invest in crypto but acknowledged the regret experienced by many due to hasty decisions.

“Our rules give people the time and the right risk warnings to make an informed choice,” said Mills.

Industry shakedown

These public discussions come at a time when the cryptocurrency industry is grappling with heightened regulatory scrutiny in the United States. The U.S. Securities and Exchange Commission (SEC) recently filed lawsuits against major cryptocurrency exchanges, Binance and Coinbase, alleging multiple violations of securities laws.

The SEC asserted that these companies operated as unregistered securities exchanges and misled investors regarding their business operations and compliance efforts.

The SEC’s actions have been met with significant resistance from the industry. Binance CEO Changpeng “CZ” Zhao argued that the SEC’s actions amount to an attack on the entire crypto industry. Binance’s American affiliate, Binance.US, announced its decision to cease support for USD deposits and trading pairs by June 13.

Coinbase CEO Brian Armstrong has been vocal about the need for regulatory clarity in the crypto industry, asserting that it can only come from Congress or through case law. He believes that the United States will arrive at the “right outcome” for crypto, be it through legislation, case law or after the 2024 presidential elections.

Concerns within the industry extend beyond the SEC’s actions, with a growing sentiment that the regulatory environment in the U.S. is stifling innovation and pushing projects out of the country.

Meanwhile, in the U.K., the APPG report outlines the government’s vision for the country to become a global hub for cryptocurrency and fintech innovation. The report emphasizes the need for regulation to safeguard consumers and ensure the U.K.’s leadership in this sector.