The UK Forum for Digital Currencies, a crypto advocacy group led by the City of London Municipal Corporation, seeks to help the UK government enact better policies that can influence international frameworks for the crypto sector while maintaining the country’s position as a global financial hub.
The City of London Corporation, the municipal governing body of UK’s capital city, has formed a crypto alliance dubbed the UK Forum for Digital Currencies (UK FDC) which aims to develop better “policies, practise and regulation” surrounding digital currencies and crypto assets. Other founding members of the group include the Digital Pound Foundation, The Payments Association, TheCityUK and UK Finance.
In its statement, the UK FDC says that as cryptocurrencies are gaining popularity as a new form of digital money across the United Kingdom and the world, it will open new opportunities for everyone. The group acknowledges that in order for the country to remain competitive in fintech, it needs to embrace the technology while mitigating the risks that crypto assets bring by creating the right regulatory framework.
With the expertise and extended network of the five associations, UK FDC is looking to establish a safe and secure environment for domestic innovators and investors to grow in the crypto sector while attracting foreign investments, keeping in line with the Rishi Sunak government’s goal of turning the UK into a global crypto and financial hub.
The group will advocate for developing a “diverse, effective and competitive” ecosystem for both publicly and privately issued cryptocurrencies in the country, and for a legal and regulatory framework that promotes innovation by prioritising consumer protection, financial stability and market integrity. The alliance will support the HM Treasury and the Bank of England (BoE) in its retail CBDC project, acting as a partner to help coordinate the government’s efforts to collaborate with the private sector in releasing the digital pound into the economy.
UK FDC analyses that the traditional financial services ecosystem will face various challenges or disruptions when introducing crypto-based payments systems. For this reason, the group will help traditional players in the payments sector better understand the functionalities of crypto ecosystems through education, and create a “constructive bridge” between trade associations representing both incumbent and new players in the payments industry to join forces and advocate for “appropriate policy and proportionate regulation” to mitigate any potential risks.
Understanding the differences between both the groups, the forum intends to develop a common terminology which embraces existing definitions used in the sector into a single lexicon; recommend domestic standards and policies for the crypto sector that can both influence and work in parallel with international frameworks; organise discussions and engagement between the country’s existing financial services and the crypto industry to help reduce the barrier between them and develop a mutual understanding of rules and processes; and finally educate law and policymakers in the country on benefits of the crypto industry and how it can help the government attain growth and attract foreign investments.
Each member of the UK FDC has its own set of work on digital currencies and crypto assets and the association presents as an opportunity for the groups to coordinate where it is necessary to avoid overlapping. CryptoUK, an advocacy group made up of 150 domestic and international cryptocurrency service providers including Coinbase, eToro, CEX.IO, CoinShares, CommerceBlock and BlockEx, is the first crypto trade association in the country and is working with the government on policies to prevent illegal activities involving cryptocurrencies. Likewise last June, the Digital Pound Foundation, Payments Association and UK Finance formed the Industry Digital Currencies Coordination Group with similar intentions to the UK Forum for Digital Currencies.
The UK’s Financial Services and Markets Bill, which will give regulators like the Financial Conduct Authority (FCA) more power to regulate cryptocurrencies and fiat-backed stablecoins, is set to be voted into law by the House of Commons in April 2023. A consultation paper will be released by the government in the coming weeks for feedback from the public regarding what other policies need to be put in place to better regulate the sector.