This is Bloomberg Crypto, a daily Bloomberg Ihart podcast, and I'm Philip Bloggercrunsler, Senior editor for Bloomberg News. In for Stacy Marie Ishmael. It is Tuesday, March seventh. Over the past few weeks, we have seen US regulators, both in federal and state levels, in some cases take aim at crypto companies with accusations of fraud and unregistered securities offerings. These moves send shockwaves through the digital asset industry, and the new regulations have raised concerns about potential overregulation or overstepping in the US, with some referring to the actions as a regulatory carpet bombing moment. By contrast, on the other side of the Atlantic, the UK and EU are taking a slightly different approach. The UK Treasury has recently proposed new rules for crypto related businesses aimed at stepping up transparency and consumer protection. Meanwhile, the planned EU Markets in Crypto Assets or MICA regulations seeks to provide a clear legal framework for digital assets across all member states. Here we meet today to discuss all of this. Is Bloomberg Crypto reporter Emily Nicole. Emily I want to start out by talking about the US, because there's been quite a lot happening there over the last couple of weeks, especially on the or uniquely, I guess we could say, on the enforcement front. Could you talk us through the main things that have hit in the US over the last couple of days and weeks. It's really been a bit of a departure for the US in terms of what the global consensus was for how bodies wanted to regulate crypto. So most countries have been working towards a general framework that they might be able to put around crypto businesses one day, and politicians have been working towards passing legislation to that effect. Each country doing their own thing, but everybody trying to be a little bit joined up. In the US, however, there's been a bit of a political stalemate over crypto, and obviously they have their own stalemates still with just in politics in general, it's a very divided country. But that is meant that not much has been moving on the framework or the regulation front, except crypto doesn't slow down. Crypto doesn't stop. Companies are still going bust for aud is still happening, and so the Securities and Exchange Commission has taken it upon itself to continue with a spate of enforcements. So that's been several settlements that they've signed with crypto exchanges and other companies trying to also make a bit of a mark in terms of how they think crypto should be categorized. And that's created a bit of an unwelcome environment for crypto in the US, at least from the company's perspective, and also put the US on a bit of a different trajectory compared to other nations. So you mentioned this like interesting juxtaposition between how quickly crypto moves and how slowly legislation moves putting in place frameworks as we know with micaphrases. Could you argue that in a way, it's logical that we're seeing the SEC and the regulators kind of move first, given what happened up to and including FTX last year. So the SEC's thinking here is that something has to happen around crypto, like it can't be allowed to just continue to operate at well. Companies need some level of guidance, even if it's just to say this is what not to do, and so that's why it's been taking action. It's been saying, you know, you can't be offering stay services if you're not making your terms clear to users. You can't be operating coins that we may consider security if you don't have the relevant permissions. The only problem is is that the crypto industry doesn't quite understand the SEC's thinking on all of these topics, because again, without frameworks, is not particularly clear, and they often disagree as to whether or not those actions were warranted, were sufficiently justified. And that's what's creating the uneven dichotomy in the US. Okay, I want to put a bookmark there, and I want to move over the Atlantic, move across the Atlantic and talk a little bit about what's going on the UK side, because the UK government has made some moves earlier this year, what has been going on there Earlier this year, in the start of February, the UK Treasury announced what its plan would be to regulate the broader cryptosphere. So last year the UK said going to be talking more about stable coins, We're going to be talking more about how crypto envelops itself into regular payment systems. We've spoken about this on the podcast before. It's it's a bit of the crypto industry which looks most like traditional finances. So it's the easiest for regulators to understand. Now what we're seeing are the rules for what could be the rest of crypto. So how crypto companies should try and register with proper licensing, you know, what they should be doing in terms of market abuse, how they should be segregating different activities under different units to look a little bit more like what we see in traditional finance. And those are the rules that the UK came out with in February. There are some more considerations to have. These are still just proposals. We've got to have you consultation and feedback and then it all goes to the regulator and they have to have their say and then eventually we get to the point of legislation. But this was like the first big step for the UK on crypto rules. The UK is an interesting one because at around this time last year there was a lot of sort of simmering discontent in the crypto industry that UK was falling behind and you know, UK needed to catch up to places like Paul, including the US, and it was in a crypto friendly destination. And then you had the Boris Johnson, Rishi Sunak wanting to become a you know, market themselves as do orth the UK as a crypto friendly hub. And then you had the political turmoil of the summer and early fall where Johnson fell. Boris Johnson has resigned as British Prime Minister, Liz Trust has quit as Prime minister. We are going to have Raschi Sunac as our next prime minister. It's a prime minister that comes without a democratic elect There was a lot of hope, I guess you could say among some crypto firms that something was going to shake out here. What is your best sense of where we stand now from the industry's point of view, Are they still just waiting the wings or are they becoming more optimistic? Definitely becoming more optimistic, but also still waiting in the wing. It's what a perfect journalist danser. So there is definitely cause for optimism. The government has given clear indications about what it thinks on crypto and even some clear indications of what the rules could be. Obviously, you know, consultation could still happen, things could feels change, but largely that that is the statest quote the crypto companies will now be aiming for, and ultimately what you hear from crypto companies is that regulatory clarity is the be all and end all. They just want to know what's going on, even if it's stricter rules, and so the UK is looking very appealing from that front. Also because of the general sentiment that was expressed by the UK last year it wanted to become a global crypto hub, and that made companies think more about setting up shop in London, investing here as a European base. So far though, that hasn't really led to much on the ground. We haven't seen a whole lot of expansion in terms of, you know, more startup being founded here, more investment happening here. There has been a little bit of like staff expansion from the existing crypto companies that already had bases here, like coin based Gemini Kraken, but for the most part, we're still kind of waiting to see what the outcomes will be and I think it'll it'll be another year or so before any of that even comes to fruition. Yeah, and it's worth pointing out that it's been a pretty long crypto winter now and everything from funding has been restricted I guess it's natural for it to take a little bit of time for this to shake out, given where the industry has been of the last twelve to fifteen months. Yeah, and actually we're already seeing what could be the eventual outcome for the UK happening in Europe, where let lawmakers have been working on their version of crypto legislation for at least two three years at this point. As you called it earlier, MICA is the directive and that is now close to being signed in the coming year. And so we've even been seeing funding in Europe increase quite a lot from what it used to be, more than doubled in the last year, year on year for the quarter that's just gone. So crypto investment is definitely happening in Europe where it's declining elsewhere. Coming up more with Bloomberg reporter Emily Nicole on the UK and EU crypto regulations, we'll be right back. So I want to come back to Mike and a little bit, but first I just want to do a little stop at something that you and I have discussed before, but an area where there has been I guess we could call it a crypto adjacent area where there's been some action lately, and that's digital pound, or Britcoin as it's now being called in some circles. Can you just give us the potted version of what's going on there? Yeah, so if you listen back to the episode that Philan I did on this not that long ago, then you'll be fully aware of this synopsis. But all central banks around the world generally and now considering what they might do in the world of digital currency, is a digital version of the government sterling. This is a little bit like a stable coin, you know. It would be tied to the value of the UK's case, the pound. It will be worth one to one, but instead of being issued by a private company, will be issued by the central bank itself, in this case the Bank of England. The hope is that retail users will be able to use inital pound for everything from you know, getting paid to paying your mortgage, and there may also be a wholesale version up to be used for between settlements between banks and between big companies. But there's still a long way to go. The UK has been investigating this for quite a few years now and there's obviously a lot more work to be done still. On you know who builds technology, who the partners are, who issues the wallets that could hold digital pounds. But every time we hear from the Bank of England, it's more and more likely that this will be a reality and you know, within a few years we will have a digital pound in our wallets. Okay, So now that we're talking about things that are you know, years into making and still a ways out, let's discuss MICA a little bit because that is a big one. We did get an agreement on MICA around media last year and where do we stand now. We're still waiting for the final version to come out. Yeah. So MICA, the Markets and Crypto Acts Directive in the EU is that is the block's big crypto proposal. It should be the first step towards enabling crypto companies to operate better in the space. That includes rules for things like crypto licensing, so that companies basically will select a block country in which to register their services and then be able to passport those permissions across all twenty seven member states that will have lots of rules like their existing traditional finance things like curbs on being able to use too many stable coins in one wallet, or it'll have rules around things like being able to use stable coins under a daily limit. It will also seek to make sure that Europe has its own kind of reach on where customers can access services and try and place limits in place so that customers aren't accessing things that aren't outside the block without their control. But mostly it's still an initial step. Politicians have said this is one of many micas to come. The current set of text will be voted on in April, and it's likely to come into action probably from twenty twenty four onwards, although even after that crypto companies will have a few years to comply. Yeah, you said many micas to come, And I think that's a fairly crucial point because while MICA was making its way through the political machine, so much happened, and so what can we expect in terms of are there areas where critics are already saying, listen, we are going to have to add to micare or update MICA to deal with this and that particular problem or potential problem in the industry. Already it's missing quite a few crucial components of what we think of as the main things to regulate in crypto at present. So while it has lots of rules for crypto companies, it doesn't really have rules for crypto assets themselves, and to be fair to the EU, that is something that no regulator has really been able to get its head around yet how you could regulate bitcoin or ethereum. But those are things that they are now thinking about. There's also no rules for decentralized finance, no rules for staking, no rules for lending, no rules for an fts. Largely at the minute they're considered to be exempt from all of this, and so there are definitely going to at least be a MICA two, if not a MICA three and four on its way. But given that this has taken several years already, who knows what we might get those micas. And when it comes to stable coins, which is a topic that we've been sort of hitting on again and again and again ever since well last year Terra USD debacle and even before that, what are the issues that are being raised here? So, as I said earlier, stable coins are the things that look most like traditional money, traditional finances, So regulators have got the most formed rules on those today in the UK and Europe in particular, and that's good, right It means that there's are these parts of crypto that are already kind of getting put in check. The only problem is is that no regulator has been able to say definitively that any of the stable coins that are out there at present, be that Tether's USDT or Circle's USDC meets the standards that they would require for stable coin issuers. They need to have things like proper segregation of funds, be able to show transparency transparently, that they meet one to one requirements on the clatteral backing those token, that they have sufficient risk management in place, that getting full financial audits every year. These are all things that are now like pretty standard things to expect of companies in finance, particularly if you would think of a company that could issue its own currency, And those are all things that are currently nobody in crypto is able to meet. So while we do have expectations, clear expectations in place in the UK and Europe for what stable coin issues will be expected to do in future, it's still a long route is to whether or not any of them will be considered compliant anytime soon. All right, So this is all pretty high level stuff, But if you're a crypto user, What does this ultimately mean for you? If you're someone who's based in the UK and Europe, it means that in the next few years you can expect to have a proper regime in place. That means that there will be crypto companies in those countries that are regulated, that are licensed for you to go to that you can have a little bit of faith that at least someone who's in a form of authority has checked that that company is doing what it says it's doing and it's acting in the best interests of you the user. What it doesn't mean it the minute, though, is that there's going to be any sort of protections for you. So while that the FCA in the UK or some of the regulary bodies and the EU like ESTHMA will be making checks to make sure, for example, there's no untoward money laundering going on, or that you know, everybody's reasonably declaring all the risks that they should, there's not going to be things that we used to like insurance over your holding, so if a company went bust, you definitely get all your money back, or you know, if you were a subject to a scan that they'd have to pay that back to you. Those aren't things that they're even anywhere close to promising for crypto. So it's a little bit of a mixed bag, right. You get a little bit more of a sense that you're that you're dealing with somebody who knows what they're doing, but you don't necessarily get the sense that Crypto is going to change from being the current message, which is, if you invest in crypto, be prepared to lose all of your money. Thank you, Emily. That was Bloomberg reporter Emily Nicole. You can find more of her reporting on the Bloomberg Terminal and on Bloomberg dot com. For more, be sure to check out our twice weekly newsletter, Bloomberg Crypto. This is Bloomberg Crypto, a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net. The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our senior producer is Janet Babin. Our producers are Mohammed Faroup, and Sharon Berrio. Our associate producers are Ty Butler and Moses on um Desta wonder At is our engineer. Original music by Leo Sidron. I'm Stacy Mariashmal. We'll be back tomorrow at the d

This is Bloomberg Crypto, a daily Bloomberg Ihart podcast, and I'm Philip Bloggercrunsler, Senior editor for Bloomberg News. In for Stacy Marie Ishmael. It is Tuesday, March seventh. Over the past few weeks, we have seen US regulators, both in federal and state levels, in some cases take aim at crypto companies with accusations of fraud and unregistered securities offerings. These moves send shockwaves through the digital asset industry, and the new regulations have raised concerns about potential overregulation or overstepping in the US, with some referring to the actions as a regulatory carpet bombing moment. By contrast, on the other side of the Atlantic, the UK and EU are taking a slightly different approach. The UK Treasury has recently proposed new rules for crypto related businesses aimed at stepping up transparency and consumer protection. Meanwhile, the planned EU Markets in Crypto Assets or MICA regulations seeks to provide a clear legal framework for digital assets across all member states. Here we meet today to discuss all of this. Is Bloomberg Crypto reporter Emily Nicole. Emily I want to start out by talking about the US, because there's been quite a lot happening there over the last couple of weeks, especially on the or uniquely, I guess we could say, on the enforcement front. Could you talk us through the main things that have hit in the US over the last couple of days and weeks. It's really been a bit of a departure for the US in terms of what the global consensus was for how bodies wanted to regulate crypto. So most countries have been working towards a general framework that they might be able to put around crypto businesses one day, and politicians have been working towards passing legislation to that effect. Each country doing their own thing, but everybody trying to be a little bit joined up. In the US, however, there's been a bit of a political stalemate over crypto, and obviously they have their own stalemates still with just in politics in general, it's a very divided country. But that is meant that not much has been moving on the framework or the regulation front, except crypto doesn't slow down. Crypto doesn't stop. Companies are still going bust for aud is still happening, and so the Securities and Exchange Commission has taken it upon itself to continue with a spate of enforcements. So that's been several settlements that they've signed with crypto exchanges and other companies trying to also make a bit of a mark in terms of how they think crypto should be categorized. And that's created a bit of an unwelcome environment for crypto in the US, at least from the company's perspective, and also put the US on a bit of a different trajectory compared to other nations. So you mentioned this like interesting juxtaposition between how quickly crypto moves and how slowly legislation moves putting in place frameworks as we know with micaphrases. Could you argue that in a way, it's logical that we're seeing the SEC and the regulators kind of move first, given what happened up to and including FTX last year. So the SEC's thinking here is that something has to happen around crypto, like it can't be allowed to just continue to operate at well. Companies need some level of guidance, even if it's just to say this is what not to do, and so that's why it's been taking action. It's been saying, you know, you can't be offering stay services if you're not making your terms clear to users. You can't be operating coins that we may consider security if you don't have the relevant permissions. The only problem is is that the crypto industry doesn't quite understand the SEC's thinking on all of these topics, because again, without frameworks, is not particularly clear, and they often disagree as to whether or not those actions were warranted, were sufficiently justified. And that's what's creating the uneven dichotomy in the US. Okay, I want to put a bookmark there, and I want to move over the Atlantic, move across the Atlantic and talk a little bit about what's going on the UK side, because the UK government has made some moves earlier this year, what has been going on there Earlier this year, in the start of February, the UK Treasury announced what its plan would be to regulate the broader cryptosphere. So last year the UK said going to be talking more about stable coins, We're going to be talking more about how crypto envelops itself into regular payment systems. We've spoken about this on the podcast before. It's it's a bit of the crypto industry which looks most like traditional finances. So it's the easiest for regulators to understand. Now what we're seeing are the rules for what could be the rest of crypto. So how crypto companies should try and register with proper licensing, you know, what they should be doing in terms of market abuse, how they should be segregating different activities under different units to look a little bit more like what we see in traditional finance. And those are the rules that the UK came out with in February. There are some more considerations to have. These are still just proposals. We've got to have you consultation and feedback and then it all goes to the regulator and they have to have their say and then eventually we get to the point of legislation. But this was like the first big step for the UK on crypto rules. The UK is an interesting one because at around this time last year there was a lot of sort of simmering discontent in the crypto industry that UK was falling behind and you know, UK needed to catch up to places like Paul, including the US, and it was in a crypto friendly destination. And then you had the Boris Johnson, Rishi Sunak wanting to become a you know, market themselves as do orth the UK as a crypto friendly hub. And then you had the political turmoil of the summer and early fall where Johnson fell. Boris Johnson has resigned as British Prime Minister, Liz Trust has quit as Prime minister. We are going to have Raschi Sunac as our next prime minister. It's a prime minister that comes without a democratic elect There was a lot of hope, I guess you could say among some crypto firms that something was going to shake out here. What is your best sense of where we stand now from the industry's point of view, Are they still just waiting the wings or are they becoming more optimistic? Definitely becoming more optimistic, but also still waiting in the wing. It's what a perfect journalist danser. So there is definitely cause for optimism. The government has given clear indications about what it thinks on crypto and even some clear indications of what the rules could be. Obviously, you know, consultation could still happen, things could feels change, but largely that that is the statest quote the crypto companies will now be aiming for, and ultimately what you hear from crypto companies is that regulatory clarity is the be all and end all. They just want to know what's going on, even if it's stricter rules, and so the UK is looking very appealing from that front. Also because of the general sentiment that was expressed by the UK last year it wanted to become a global crypto hub, and that made companies think more about setting up shop in London, investing here as a European base. So far though, that hasn't really led to much on the ground. We haven't seen a whole lot of expansion in terms of, you know, more startup being founded here, more investment happening here. There has been a little bit of like staff expansion from the existing crypto companies that already had bases here, like coin based Gemini Kraken, but for the most part, we're still kind of waiting to see what the outcomes will be and I think it'll it'll be another year or so before any of that even comes to fruition. Yeah, and it's worth pointing out that it's been a pretty long crypto winter now and everything from funding has been restricted I guess it's natural for it to take a little bit of time for this to shake out, given where the industry has been of the last twelve to fifteen months. Yeah, and actually we're already seeing what could be the eventual outcome for the UK happening in Europe, where let lawmakers have been working on their version of crypto legislation for at least two three years at this point. As you called it earlier, MICA is the directive and that is now close to being signed in the coming year. And so we've even been seeing funding in Europe increase quite a lot from what it used to be, more than doubled in the last year, year on year for the quarter that's just gone. So crypto investment is definitely happening in Europe where it's declining elsewhere. Coming up more with Bloomberg reporter Emily Nicole on the UK and EU crypto regulations, we'll be right back. So I want to come back to Mike and a little bit, but first I just want to do a little stop at something that you and I have discussed before, but an area where there has been I guess we could call it a crypto adjacent area where there's been some action lately, and that's digital pound, or Britcoin as it's now being called in some circles. Can you just give us the potted version of what's going on there? Yeah, so if you listen back to the episode that Philan I did on this not that long ago, then you'll be fully aware of this synopsis. But all central banks around the world generally and now considering what they might do in the world of digital currency, is a digital version of the government sterling. This is a little bit like a stable coin, you know. It would be tied to the value of the UK's case, the pound. It will be worth one to one, but instead of being issued by a private company, will be issued by the central bank itself, in this case the Bank of England. The hope is that retail users will be able to use inital pound for everything from you know, getting paid to paying your mortgage, and there may also be a wholesale version up to be used for between settlements between banks and between big companies. But there's still a long way to go. The UK has been investigating this for quite a few years now and there's obviously a lot more work to be done still. On you know who builds technology, who the partners are, who issues the wallets that could hold digital pounds. But every time we hear from the Bank of England, it's more and more likely that this will be a reality and you know, within a few years we will have a digital pound in our wallets. Okay, So now that we're talking about things that are you know, years into making and still a ways out, let's discuss MICA a little bit because that is a big one. We did get an agreement on MICA around media last year and where do we stand now. We're still waiting for the final version to come out. Yeah. So MICA, the Markets and Crypto Acts Directive in the EU is that is the block's big crypto proposal. It should be the first step towards enabling crypto companies to operate better in the space. That includes rules for things like crypto licensing, so that companies basically will select a block country in which to register their services and then be able to passport those permissions across all twenty seven member states that will have lots of rules like their existing traditional finance things like curbs on being able to use too many stable coins in one wallet, or it'll have rules around things like being able to use stable coins under a daily limit. It will also seek to make sure that Europe has its own kind of reach on where customers can access services and try and place limits in place so that customers aren't accessing things that aren't outside the block without their control. But mostly it's still an initial step. Politicians have said this is one of many micas to come. The current set of text will be voted on in April, and it's likely to come into action probably from twenty twenty four onwards, although even after that crypto companies will have a few years to comply. Yeah, you said many micas to come, And I think that's a fairly crucial point because while MICA was making its way through the political machine, so much happened, and so what can we expect in terms of are there areas where critics are already saying, listen, we are going to have to add to micare or update MICA to deal with this and that particular problem or potential problem in the industry. Already it's missing quite a few crucial components of what we think of as the main things to regulate in crypto at present. So while it has lots of rules for crypto companies, it doesn't really have rules for crypto assets themselves, and to be fair to the EU, that is something that no regulator has really been able to get its head around yet how you could regulate bitcoin or ethereum. But those are things that they are now thinking about. There's also no rules for decentralized finance, no rules for staking, no rules for lending, no rules for an fts. Largely at the minute they're considered to be exempt from all of this, and so there are definitely going to at least be a MICA two, if not a MICA three and four on its way. But given that this has taken several years already, who knows what we might get those micas. And when it comes to stable coins, which is a topic that we've been sort of hitting on again and again and again ever since well last year Terra USD debacle and even before that, what are the issues that are being raised here? So, as I said earlier, stable coins are the things that look most like traditional money, traditional finances, So regulators have got the most formed rules on those today in the UK and Europe in particular, and that's good, right It means that there's are these parts of crypto that are already kind of getting put in check. The only problem is is that no regulator has been able to say definitively that any of the stable coins that are out there at present, be that Tether's USDT or Circle's USDC meets the standards that they would require for stable coin issuers. They need to have things like proper segregation of funds, be able to show transparency transparently, that they meet one to one requirements on the clatteral backing those token, that they have sufficient risk management in place, that getting full financial audits every year. These are all things that are now like pretty standard things to expect of companies in finance, particularly if you would think of a company that could issue its own currency, And those are all things that are currently nobody in crypto is able to meet. So while we do have expectations, clear expectations in place in the UK and Europe for what stable coin issues will be expected to do in future, it's still a long route is to whether or not any of them will be considered compliant anytime soon. All right, So this is all pretty high level stuff, But if you're a crypto user, What does this ultimately mean for you? If you're someone who's based in the UK and Europe, it means that in the next few years you can expect to have a proper regime in place. That means that there will be crypto companies in those countries that are regulated, that are licensed for you to go to that you can have a little bit of faith that at least someone who's in a form of authority has checked that that company is doing what it says it's doing and it's acting in the best interests of you the user. What it doesn't mean it the minute, though, is that there's going to be any sort of protections for you. So while that the FCA in the UK or some of the regulary bodies and the EU like ESTHMA will be making checks to make sure, for example, there's no untoward money laundering going on, or that you know, everybody's reasonably declaring all the risks that they should, there's not going to be things that we used to like insurance over your holding, so if a company went bust, you definitely get all your money back, or you know, if you were a subject to a scan that they'd have to pay that back to you. Those aren't things that they're even anywhere close to promising for crypto. So it's a little bit of a mixed bag, right. You get a little bit more of a sense that you're that you're dealing with somebody who knows what they're doing, but you don't necessarily get the sense that Crypto is going to change from being the current message, which is, if you invest in crypto, be prepared to lose all of your money. Thank you, Emily. That was Bloomberg reporter Emily Nicole. You can find more of her reporting on the Bloomberg Terminal and on Bloomberg dot com. For more, be sure to check out our twice weekly newsletter, Bloomberg Crypto. This is Bloomberg Crypto, a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net. The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our senior producer is Janet Babin. Our producers are Mohammed Faroup, and Sharon Berrio. Our associate producers are Ty Butler and Moses on um Desta wonder At is our engineer. Original music by Leo Sidron. I'm Stacy Mariashmal. We'll be back tomorrow at the d