Crypto assets regulation in the UK: an assessment of the regulatory effectiveness and consistency

Abstract

Purpose

The UK authority published its first regulatory guidance on crypto-assets in July 2019. This paper aims to critically evaluate the effectiveness of the crypto-asset regulation in the UK and the consistency of the existing regulatory scheme.

Design/methodology/approach

This paper adopts comparative methods to carry out the analysis. The paper begins by elaborating the development of crypto-assets alongside the financial innovation in the world and pinpointing the core Acts and Regulations applied to crypto-assets in the UK. The paper also discusses a court case in the EU to highlight an argument among legal professions concerning crypto-assets classification.

Findings

Through carefully analysing relevant primary and secondary legislation of the UK and EU, this paper identifies some unclarified issues in the regulatory framework and discovers three flaws in the regulatory system. The paper concludes that the effectiveness of the current regulatory scheme is poor and room for improvement exists.

Originality/value

The paper provides the first review and a thorough analysis of the Laws and Acts applied to the crypto-asset regulation in the UK. It also calls on a simpler and clearer regulatory scheme from the perspectives of market participants and consumers. The discovered issues in the crypto-asset regulation in the UK may urge authorities to improve the existing regulatory frameworks and legal provisions.

Citation

Huang, S.S. (2021), "Crypto assets regulation in the UK: an assessment of the regulatory effectiveness and consistency", Journal of Financial Regulation and Compliance, Vol. 29 No. 3, pp. 336-351. https://doi.org/10.1108/JFRC-06-2020-0062