The IIF has responded to the UK Treasury’s consultative report on the future financial services regulatory regime for cryptoassets in a comment letter dated April 30, 2023. 

In its comment letter, the IIF advocates for a measured approach that does not unduly restrict the ability of regulated financial institutions to prudently engage in cryptoasset activities, such that associated risks will be subject to robust sound risk management practices.

The IIF strongly supports technology neutrality as a guiding principle for regulation in this space, and agree with the principle of “same risk, same regulatory outcome”.

Other key points made include: 

• Bank deposits are one place where extensive regulatory frameworks already exist. Tokenized bank deposits are different from stablecoins and cryptoassets.
• HMT should clarify that none of the proposed regimes in phase 1 or 2 is intended to apply to books and records systems using DLT or blockchain infrastructure.
• We support HMT’s proposals to phase in GBP stablecoins used for payments initially, to be followed by cryptoassets more broadly.
• While we broadly welcome the proposed cross-border scope of the regime as applying to activities in the UK, and activities directed at the UK, we consider it key that similar principles are used as apply to traditional finance.

The comment letter continues the close engagement of the IIF with the global standard setting bodies around cryptoasset readers.