Recommendation 99

Whilst low authorisation rates for these firms may be indicative of regulatory inefficiency, it is important to note that there is also a lack of a dedicated regulatory regime for digital assets, with these firms instead regulated under general MLRs. This concern was echoed by Innovate Finance, which told us that: “On digital assets, use of blockchain and regulation of crypto currency services, the Government needs to set out clearly the UK’s risk/opportunity approach. The EU has a very clear approach implemented through MiCA; the incoming US administration has also given a clear signal to the market of its support for crypto currencies and digital assets and this is already affecting investment decisions. The UK meanwhile has yet to give a comprehensive statement of direction or position that stands out internationally and provides clarity and confidence for investors.” 161