The cryptocurrency market has to prepare for the upcoming implementation of sector-specific laws as UK may present cryptocurrency laws this year.
UK is starting to realize the cryptocurrency opportunity
Cryptocurrency legislation would soon be established, according to Andrew Griffith, finance secretary to the UK Treasury, who recently spoke with CNBC. Griffith remarked, “The window is over the next 12 months or so.”
With Brexit, he continued, “We’ve won control back of the rules, not something that the UK has enjoyed for decades.” Hence, we have the capacity to act proportionally and nimbly, and I’m very keen we make use of that chance.
The United States has recently cracked down on cryptocurrency businesses, but the U.K. has adopted a different strategy, with officials there presenting the nation as a center for the digital asset industry.
In a consultation document it released in February, the UK government suggested regulations for the “turbulent industry” of cryptocurrencies.
The government stated in its release that “our strong approach to regulation mitigates the most serious dangers while leveraging the advantages of crypto technology.” “This makes it possible for a brand-new, fascinating industry to grow and thrive in safety, generating employment and investment.”
We like to have the same asset and transaction regulated uniformly wherever possible. We want to capture the extra opportunities that exist in the distributed ledger or crypto asset market, though, Griffith told CNBC.
One of the Treasury’s suggestions would force crypto companies that have previously registered with the Financial Conduct Authority to apply for permission under the new system based on the Financial Services and Markets Act.
UK’s Crypto bill to soon be introduced
As one of these new rules, Griffith referenced the Financial Services and Markets Bill (FSMB), which is now in the works.
Midway through 2022, when UK Prime Minister Rishi Sunak was still serving as top finance minister, the major FSMB bill—which would give regulators more control over the digital asset sector—was proposed.
The comprehensive FSMB is presented as a reform of the UK’s regulatory system that is required to put the nation in a better advantageous financial position. It covers guidelines for both stablecoins and more generally speaking crypto assets.
Several legislative modifications have been proposed by lawmakers. Griffith put up the definition of “crypto asset” as “any cryptographically protected digital representation of value or contractual rights” that can be electronically transmitted, stored, or exchanged that makes use of blockchain technology.
If the FSMB is ultimately enacted into law, other modifications would expand the FCA’s jurisdiction over cryptocurrency and compel businesses to adhere to stricter compliance requirements.
Enforcement is in charge of crypto regulation in the US at the moment, notably securities laws. On the other hand, the US House Financial Services Committee recently released a draught law on stablecoin regulation that mandates providers to keep liquid assets supporting their currencies on at least a one-to-one basis.
John Cunliffe, the deputy governor of the Bank of England, made a similar point this week in a speech at an industry gathering. He emphasized that there should be restrictions on the widespread use of stablecoins for payments until a regulatory framework is in place.
The speaker stated that “systemic stablecoins will need to be backed with high quality and liquid assets,” adding that “these may either comprise deposits at the Bank of England or extremely highly liquid securities, or some mix of the two.”