The debate on cryptocurrency regulation continues to evolve in different parts of the world, with the United States and the United Kingdom taking divergent paths. While United States Federal Reserve Board Governor Michelle Bowman expresses doubt on the need for a central bank digital currency (CBDC) and highlights concerns about its potential impact on the payment system and financial inclusion, the United Kingdom is aiming to capitalize on the benefits of blockchain technology and position itself as a crypto hub with pragmatic and proportionate regulation.

In a recent speech at Georgetown University, Bowman offered her perspective on CBDC, indicating skepticism about its potential to improve the payment system or enhance financial inclusion in the United States. She pointed out that the new FedNow system, which is currently being developed, would need to be outperformed by CBDC to gain market acceptance. Moreover, Bowman highlighted that a significant percentage of Americans who do not have bank accounts may not be inclined to use CBDC, raising doubts about its effectiveness in promoting financial inclusion.

On the other hand, the United Kingdom is taking a different approach. Andrew Griffith, the Economic Secretary to the UK Treasury, emphasized in a recent CNBC interview that the long-term vision for the UK is to enable firms to make the most of opportunities from crypto assets with sound regulation. He highlighted that the UK government is now well-positioned to regulate crypto in a pragmatic and proportionate manner, which marks a significant shift from previous decades.

Griffith’s comments align with the views of UK Prime Minister Rishi Sunak, who has expressed his desire to see the UK become a crypto hub. This approach puts the UK in line with other regions such as Dubai, Singapore, and Hong Kong, which have also made efforts to position themselves as crypto hubs by embracing blockchain technology and fostering an environment conducive to cryptocurrency businesses.

In contrast, the United States has seen increased enforcement action in the crypto space since Gary Gensler took office as the Chair of the Securities Exchange Commission in April 2021. This indicates a more cautious approach towards cryptocurrency regulation, with a focus on compliance and enforcement measures to protect investors and maintain market integrity.

The differing approaches towards cryptocurrency regulation in the United States and the United Kingdom reflect the evolving landscape of digital assets and the challenges and opportunities they present. While Bowman expresses doubts about CBDC and its potential impact on the payment system and financial inclusion in the US, the UK is actively pursuing a vision of pragmatic and proportionate regulation to capitalize on the benefits of blockchain technology and foster growth in the private sector and economy.

As the global conversation on cryptocurrency regulation continues to evolve, it is crucial for policymakers to strike a balance between innovation and investor protection. Pragmatic and proportionate regulation that fosters growth while ensuring compliance and market integrity can be a key driver for the development of a thriving cryptocurrency ecosystem. It remains to be seen how the approaches of the United States and the United Kingdom will shape the future of cryptocurrency regulation in their respective jurisdictions.