The UK cryptocurrency market will undergo industry-specific regulations within the year.
UK Treasury Chancellor Andrew Griffiths said in a recent interview that crypto regulation will soon be strengthened.
“In the next 12 months or so. We have regulatory control where we haven’t had decades,” he added, referring to Brexit. “So we have the ability to move nimbly and in balance. I’m sure you’ll make the most of that opportunity.”
In February, the U.K. government published a consultation paper proposing rules for cryptocurrencies, saying they wanted them to govern a “chaotic industry.”
Among the proposals, HM Treasury seeks to require digital currency firms registered with the UK’s Financial Conduct Authority (FCA) to apply for new financial services under a regime based on market and exchange law.
Griffith cited the ongoing Financial Services and Markets Bill (FSMB) as part of the upcoming regulations.
The FSMB is seen as a landmark bill that will give the regulator greater powers over the digital asset space. The bill was introduced in mid-2022, while Prime Minister Rishi Sunak was still finance minister.
UK Cryptocurrency Act across The final stage
Broadly, the FSMB has been touted as an overhaul of the UK’s regulatory framework, needed to put the country in a more competitive financial position. The bill covers stablecoin and cryptocurrency regulations broadly.
Lawmakers have pushed for several amendments to the bill. Griffith proposed to define a “cryptocurrency” as “any cryptographically secure digital representation of value or contractual right” that can be transferred, stored or traded electronically and using blockchain technology.
If the FSMB does pass into law, other amendments would expand the FCA’s oversight of the asset class, forcing firms to comply with stricter compliance obligations.
The bill has completed its third reading in the UK House of Commons. It is currently in the UK Senate, which means all members have the opportunity to amend the bill. After both houses have agreed on all aspects, the document will be sent to King Charles to be signed into law.
At the same time, the U.S. is developing crypto regulations through enforcement actions, especially in securities laws. However, the U.S. House of Representatives Financial Services Committee recently released a draft stablecoin regulation bill that would require providers to maintain liquidity reserves backing their tokens at least one-to-one.
BoE deputy governor John Cunliffe echoed similar sentiments, emphasizing stablecoins as one of the bank’s areas of focus in a speech this week.
“Systemic stablecoins need to be backed by high-quality and liquid assets in order to meet these expectations and standards set by the FPC.”
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Ming Ying
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