According to some American lawmakers and businesses, the US is stifling innovation with its confusing and often heavy-handed approach to regulating the crypto space. However, web3 companies are hoping the UK will not follow suit. In fact, a16z, the crypto-focused division of venture capital giant Andreessen Horowitz, recently asked the UK Treasury to adopt a more “nuanced” approach to regulation. It stated that “the US approach is not one that the UK should consider adopting.”
In February, the UK published its first rules to regulate crypto in the form of a consultation paper. The Treasury announced that it wanted to regulate crypto exchanges like traditional finance venues. Brian Quintenz, head of policy at a16z, took to Twitter on Monday to express his support for the UK’s “proportionate and focused, agile and flexible” approach. He also mentioned that the investment firm was looking forward to continuing its work with the Treasury to “establish world-class rules which will protect consumers and allow this innovation to flourish.”
Just last month, a16z warned that the US was losing its edge in the digital asset space. In contrast, the British government has expressed its desire to become a “global crypto asset technology hub.” a16z was not the only company to voice its opinion about UK regulation. Polygon Labs, too, expressed its approval by saying it was “incredibly encouraged” to see the UK working to regulate the industry. Rebecca Rettig, Polygon Labs Chief Policy Officer, also commented on Twitter that the UK consultation was “excellent.”
Polygon Labs, the group of companies behind the Polygon blockchain network and the 10th largest cryptocurrency MATIC, made a few suggestions to the Treasury as well. Notably, it posited that “unbacked crypto assets”—cryptocurrencies without a specific backing, like Bitcoin— should be “treated differently” from coins and tokens that have a team working behind the tech or have their value tied to other assets.
Coinbase CEO Brian Armstrong also recently praised the UK for “moving fast on sensible crypto regulation to both drive economic growth and consumer protection.” As the biggest crypto exchange in America, Coinbase has revealed that it is actively looking to expand overseas rapidly. This move comes after the collapse of major crypto exchange FTX in November, which spurred American regulators (especially the Securities and Exchange Commission) to crack down aggressively on major crypto brands to promote compliance.
As the SEC’s Chairman, Gary Gensler has targeted American crypto exchanges like Kraken, Bittrex, and Coinbase for allegedly selling unregistered securities. However, not everyone is happy with the crackdown; primarily Republican politicians, who believe regulators are forcing tech offshore. If this is the case, the UK appears well-positioned to welcome any such displaced crypto companies with open arms.