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OK, sure, the European Union got there first.

The bloc’s comprehensive rule framework for crypto will go into effect this year, while the UK’s is still developing.

But there are still reasons to be bullish on the UK’s competitiveness as a crypto hub — a stated ambition of Prime Minister Rishi Sunak.

Here are five of those reasons.

1. The FCA allows crypto ETNs

The Financial Conduct Authority opened the door to Bitcoin and Ethereum offerings in the UK in March.

The London Stock Exchange said it will accept applications following the go-ahead from the regulator for such products, dubbed exchange-traded notes, or ETNs.

A major caveat: The products won’t be available to retail investors.

“It’s already a pretty big reversal to allow ETNs for professional investors. And it’s something the industry has been calling out for for a while,” Oliver Linch, head of the future markets policy unit at the Adam Smith Institute, said in an emailed comment.

But the FCA’s move sets the stage for a new market segment in the UK.

“This is a really significant move and shows that the UK is serious about attracting institutions to make the City a crypto hub,” Linch said.

“That’s what moves the needle.”

2. Law Commission provides legal clarity

The UK’s Law Commission, an influential legal review body, concluded that the country’s property laws are flexible enough to accommodate digital assets.

Crypto promoters say the commission’s finding provides clarity around how crypto will be treated by the courts.

Plus, Parliament doesn’t have to write new laws.

That puts the UK ahead of EU countries that have less flexible legal systems and that must alter their civil codes to cover the fast-evolving field of digital assets.

3. Regulators launch tokenisation sandbox

Investment banks see a huge opportunity in tokenising securities like stocks and bonds.

UK regulators have responded by modifying existing regulation to allow firms to experiment with trading securities on blockchain networks in a controlled environment.

The Digital Securities Sandbox is overseen by the FCA and the Bank of England.

It has been underway since January 8, and will run for five years.

4. Comprehensive reg coming soon

The government is “pushing very hard” to complete new stablecoin rules by the end of August, Economic Secretary to the Treasury Bim Afolami said.

Beyond stablecoins, Treasury has outlined its regulatory pathway, with a proposal that encompasses issuance, exchanges, investment, custody, and lending.

5. The FCA sets a high bar for crypto firms

The UK’s financial watchdog approves very few of the crypto firms that apply to operate in the country.

And that’s a good thing.

Sure, compliance is a cost centre for firms, and the rules can be confusing.

But the UK has a regulator that takes consumer protection seriously, and is expanding its team to get to grips with this new asset class.

That’s how fair, liquid markets develop.

Want to air compliance gripes or just chat about crypto regs? Email me on joanna@dlnews.com.