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One driver for the first widely adopted cryptocurrency Bitcoin was to create a store of value that existed outside of government control. It is therefore no surprise that attempts to regulate the rapidly developing crypto asset market have required great efforts from regulators and legislators around the world to keep apace.

In this blog, we compare key drivers and results of the regulatory approach being taken in the US and UK. While the U.S. is leading the way on the enforcement of crypto regulations, the UK has taken greater steps in relation to banking approvals. With regard to tax treatment, the position is becoming much clearer in both jurisdictions.

Just as U.S. regulators are wrestling with the question of how to regulate cryptocurrencies and digital assets, as reported here, the same questions are being asked in the UK. Some have been answered with refreshing clarity; some remain much more opaque.

As with any new technology or asset, there are different spheres of legal and regulatory influence to consider. At the most basic, what is it? (a.k.a. Can I steal it? And can I recover it?). The next level is typically regulatory – Who regulates it? How it is regulated? How are the public and markets protected?

How any jurisdiction answers these questions will have a material impact on the way private firms and others within the asset management industry deal with, and consider potential investments in, crypto assets.

With 46% of UK business reporting a cyber attack during 2019/2020 and 32% reporting at least one a week – see the UK Government’s Cyber Security Breaches Survey 2020 – the UK’s Financial Conduct Authority (“FCA”) has issued a timely warning to market participants of increasing cyber security threats in the wake of COVID-19.