On Friday, 21st October 2022, the U.K.’s Financial Services and Markets Bill publish an amendment paper to address the regulation of stablecoin.
In the amendments paper, Andrew Griffith, member of parliament and Financial Secretary to the Treasury, stated that:
“To clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities relating to cryptoassets. Cryptoasset is also defined, with a power to amend the definition.”
Recall that, in September, Richard Fuller, the Economic Secretary to the Treasury, stated that the government was dedicated to making the U.K. a “hub for crypto technologies.
On the 10th of October, the European Parliament Committee on Economic and Monetary Affairs passed the Markets in Crypto-Assets bill, and a full parliamentary vote is anticipated.
What Will Happen If the Bill Passes?
At the moment, the FCA wields UK’s crypto regulatory powers, and the registrations of any crypto firms are largely dependent on the body but with strict anti-money laundering (AML) requirements.
If the bill passes, the U.K. government will have an exhaustive crypto regulatory framework to work with. And The Financial Conduct Authority (FCA) will, however, be fully authorized to regulate crypto-related activities and ban unauthorized service providers.
Although the proceedings on the bill should be finalized by 3rd November 2022, the resignation letter tendered by the country’s Prime Minister, Lizz Truss, might impede it. Recall that she submitted her resignation letter on Thursday following the failed tax-cutting budget that rocked financial markets.
The 335-page bill introduced in July had its second reading in the House of Commons on the 7th of September.
The Concern Of The UK Government Led to This Proposal
Sometimes in July 2020, the U.K. government expressed concern about the lack of regulation on cryptocurrency and its financial products. This is because it felt crypto investors are not given the same protection that covers retail investors.
However, this led to the proposal that the Financial Conduct Authority should oversee promotional activities related to cryptocurrencies based on existing oversight without formulating a new framework for digital assets.
John Glen, the City Minister, said:
“If adverts by unauthorized firms are misleading, or don’t fully outline the risks, then people can end up losing money. That’s why we want to put more protections in place around such financial promotions, including promoting crypto assets, while continuing to ensure people have access to a wide range of products on the market.”
On the 9th of August, the U.K.’s financial regulator, FCA, published a “Dear Chief Executive” letter documenting its supervisory strategy over financial firms. In the letter, they stated:
“We will publish final rules for the promotion of crypto assets once the Treasury formalises legislation to bring these into our remit.”
It is important to reiterate that in the U.K., many crypto-related firms are not currently under the umbrella of the FCA. Although businesses can voluntarily take on the registration, it might be fully imposed in the coming year. However, the criteria laid down for the registration seem challenging for many applicants.