U.K.: add Bitcoin and crypto into new investment products
U.K.: add Bitcoin and crypto into new investment products
Crypto

U.K.: add Bitcoin and crypto into new investment products

By Stefania Stimolo - 11 Jul 2022

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U.K. fund managers are pressuring the U.K. government to succeed in establishing a new class of funds that would include Bitcoin and cryptocurrency as new investment products. 

U.K.: pressure on the government to include Bitcoin and cryptocurrency as a new fund class

The UK wants to innovate its financial product offering by leveraging blockchain and DLT technology

According to Financial Times reports, the Investment Association, a body representing the U.K. asset management industry, will ask the government and regulators to approve blockchain-traded funds that will issue digital tokens to investors instead of traditional fund shares or units.

In this regard, the body will also propose the creation of a new task force to examine how DLT technology could accelerate the creation of new products and services, allowing more investors to customize their portfolios with holdings in private companies, Bitcoin, and cryptocurrencies.

Not only that, blockchain-traded funds, also known as tokenized or on-chain funds, could be launched as early as the end of the second quarter of 2023 if the Financial Conduct Authority accelerates regulatory approval.

Chris Cummings, chief executive officer of the Investment Association, commented on the news as follows:

“Greater innovation will increase the overall competitiveness of the U.K. fund industry and improve costs, efficiency, and the quality of the investment experience.”

U.K.: welcoming and developing tokenized funds 

The U.K. government’s call for regulatory support on tokenized funds and the addition of Bitcoin and cryptocurrency into new investment products expresses two sides of the same coin. 

Indeed, while legal and regulated recognition of cryptocurrency and blockchain occurs, the government may intervene to control the market, perhaps by introducing taxes and other tools. 

Brian McNulty, managing director of FundAdminChain, a financial technology group that is working with the London Stock Exchange and four global asset managers to develop tokenized funds for the British market, said:

“Asset managers have realized there is potential to generate alpha [market returns] through tokenization. Tokenized funds can offer greater transparency, instant settlement, and improvements in data and analytics that will contribute to a more efficient system for investors, but we need regulatory support to ensure that the U.K. remains competitive with other jurisdictions.”

While, as they point out on Twitter, here is the other side of the coin. 

“The U.K. asset management industry has formed a task force to study how investors can add #Bitcoin and cryptocurrencies to their portfolios using new investment products – Financial Times. They want TAXES!

UK regulation and Coinbase CEO

Brian Armstrong, CEO of Coinbase, writes on Twitter to highlight the good work the UK is doing on cryptocurrency regulation:

He also mentions the European Union in the tweet, saying that both are helping to create a regulatory framework that is clear and uniform for the entire cryptocurrency market.

His comment, however, causes some confusion, as a few weeks ago, the UK decided not to follow European directives for regulations regarding money laundering activities through cryptocurrency. In fact, no stringent rules will be drawn and set for non-custodial wallets in the UK for now.

Global Crypto Hub

In early June, the ministry’s director-general for financial services, Gwyneth Nurse, had said that the U.K. would test blockchain technology for traditional markets, with a mission to become a “global crypto hub.” 

In this sense, Nurse would argue how the core crypto technology could soon be used in the country to trade and settle stocks and bonds.

Blockchain is thus being tested to make the financial market infrastructure more innovative and efficient. 

Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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