UK must relax KYC requirements for cryptocurrency in order to surpass the US in Web3 – Think tank

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Policy Exchange recently unveiled its comprehensive report on the fascinating realm of Web3, featuring a compelling set of ten proposals meticulously crafted for the discerning attention of the United Kingdom’s government.

In the wake of Web3 companies departing the United States due to regulatory uncertainties, the United Kingdom stands at a unique juncture brimming with potential.

However, to seize this opportunity, the UK must chart its own regulatory course, smoothing the regulatory landscape for cryptocurrencies in certain aspects, as advocated by a venerable think tank.

On the 2nd of October, the influential conservative think tank, Policy Exchange, graced the public domain with its seminal report on Web3, housing a treasury of ten proposals, all thoughtfully devised to fortify and enhance Web3 regulation within the nation.

One of the report’s standout proposals revolves around limiting the legal liabilities of individuals vested in decentralised autonomous organizations (DAOs).

This proposition comes in response to a disconcerting precedent set in the United States, where any American citizen, regardless of their current or past ownership of DAO tokens, could be held liable for any legal transgressions committed by the DAO.

The report further advocates for a reevaluation of the United Kingdom’s chief financial regulatory body, the Financial Conduct Authority (FCA).

It recommends a relaxation of the prevailing Know Your Customer (KYC) norms, inviting the exploration of “alternative and innovative techniques,” including digital identities and blockchain analytics tools.

Eminent experts concur that the UK must be cautious not to undermine self-hosted wallets and should abstain from categorizing proof-of-stake services as financial entities.

Among the myriad proposals set forth, one of the most intriguing ones is the authorisation for private stablecoin issuers to house their stablecoin reserves within the hallowed vaults of the Bank of England.

Additionally, the report suggests the creation of a bespoke “tax wrapper” tailored for crypto exchanges, as well as the establishment of a novel sandbox initiative under the aegis of the Department for Science, Innovation, and Technology.

Recent times have witnessed a tightening of regulations within the United Kingdom concerning the digital assets sector.

Notably, His Majesty’s Treasury is deliberating the prohibition of all cold-calling activities promoting cryptocurrency investments, while the FCA has issued stern warnings to local crypto enterprises, mandating strict adherence to its marketing regulations under the penalty of severe consequences.