The United Kingdom’s approach to crypto regulation is one of those topics that attract some controversy. The United Kingdom has no specific crypto laws, and cryptocurrencies are not considered legal, while exchanges have registration requirements and are legal. During the G20 central bank governors and finance ministers meeting, regulating crypto assets and the crypto market was high on the agenda. They pose financial stability with recommendations to improve the oversight and functioning of global markets and adopt regulatory frameworks to eradicate the risk. The Board is highly influential among policymakers.
Cryptocurrency exchanges must register with the Financial Conduct Authority (FCA), according to platforms like Bitcode Method. A regulatory framework brings order to the markets, helps instill consumer confidence, lays out the limits of what is permissible, and provides a safe space for practical innovation to continue. Crypto assets have moved from niche products in search of a purpose to have a more mainstream presence as speculative investments, hedges against weak currencies, and potential payment instruments. Government regulations make virtual currencies accountable and transparent in their transactions. Most investors are worried about regulating crypto’s impact on the industry.
Measures of regulating crypto and crypto providers from offering services in the United Kingdom have been set in motion. On October 25, 2022, Parliament convened to discuss a proposed Financial Services and Markets Bill for economic recovery. This comes after the country’s exit from the European Union and the amendment put forward to bring cryptocurrencies into regulated financial services. The Financial Services and City Minister Andrew Griffith introduced the bill to extend beyond stablecoins. They signify that crypto companies would have to adhere to government rules to protect consumers and could encounter fines or lose their licenses if they default.
The Financial Services and Markets Bill had only proposed to bring stablecoins into regulators’ purview. Still, Treasury Minister Andrew Griffith said crypto should be treated like other financial assets, and the voting parliamentarians welcomed the amendment. Griffith noted that “the objective here is to handle them like other structures of financial assets and not to favor them, but also to conduct them within the extent of regulation for the first time.” According to Griffith, the Treasury will delegate its approach to industry and stakeholders before using the force to ensure the framework contemplates the unique benefits and risks produced by crypto activities.
What this amendment could mean for the UK
The bill suggests a range of measures to sustain and strengthen the UK’s place as a global leader in financial services, ensuring the sector proceeds to deliver for individuals and businesses in the country. Lawmakers have voted in favor of keeping the amendment in the bill, and it is due to be discussed in committee before the end of 2022. The bill will also have to make its way to the Lord’s House for its next perusal before being given royal approval and passed into law.
There are rumors that the process might be delayed or affected due to the departure of Prime Minister Liz Truss. In contrast, others are very hopeful as the successor, Rishi Sunak, is pro-cryptocurrency. The new Prime Minister is known for being vocal about crypto assets in the UK and intends to make the UK the crypto hub. Sunak noted that “plans to bring stablecoins — crypto assets whose value is connected to a fiat currency such as the US dollar or sterling — be presented into by-law as part of the Financial Services and Markets Bill, paving the way for their use in the UK as a recognized form of payment.” The plan was part of a package of access that also incorporated operating with the Royal Mint on a Non-Fungible Token (NFT) and constructing a Crypto-asset Engagement Group to work more closely with the industry. The appointment of Sunak gives crypto investors and traders a sense of relief when it comes to regulating crypto because they have a pro-crypto decision-maker in power.
The United Kingdom has taken the step to put together a package for regulating crypto with the primary aim of supporting transparency, protection for consumers and investors, and a level playing field for different market participants. Regulating crypto assets will benefit from this form of financial innovation while containing its risks. The regulation also has the potential to protect investors, prevent fraudulent activity within the crypto ecosystem, and also provide a clear guideline in the crypto economy. While they are still deliberating on the regulation, we promise to keep you updated with the progress and outcome. Note that this article is for educational purposes and in no way serves as a piece of legal advice. We highly recommend that you also research and consult an authorized financial adviser if you require legal advice.
Byline: Hannah Parker
