The deadline has come for comments on a consultation paper and call for evidence released by the United Kingdom’s HM Treasury on a proposed crypto asset regulatory framework. The, drew detailed responses from a variety of cryptocurrency industry players.
Blockchain provider Polygon Labs, venture capitalists Andreessen Horowitz , the Association for Financial Markets in Europe and the Digital Pound Foundation released their responses on May 1 to the call for comments. Among these diverse voices, some common issues were raised. The Treasury’s call for “same risk, same regulatory outcome” was well met, although there was no uniform understanding of what that entailed, aside from its basis in the Financial Services and Markets Act of 2000. California-based a16z pointed out weaknesses in the United States Securities and Exchange Commission’s dependence on the Howey test as the firm assessed the U.K. proposal.
This tied into the proposal’s emphasis on regulating activities, rather than assets themselves. The basic differences between centralized finance and decentralized finance were central to this discussion. Polygon“The source of risk in DeFi systems is significantly different than that in centralised systems, like CeFi or the traditional financial system. To this end, it may be more accurate to update: ‘same risk, same regulatory outcome’ to ‘different source of risk, same regulatory outcome.
The proposed framework treated fiat-backed stablecoins and algorithmic stablecoins differently, classifying algorithmic stablecoins as an “unbacked cryptoasset.” Polygon particularly favored the activity-based regulatory approach in this case.
Blockchain provider Polygon Labs, venture capitalists Andreessen Horowitz (a16z), the Association for Financial Markets in Europe (AFME) and the Digital Pound Foundation (DPF) released their responses on May 1 to the call for comments.