UK’s Crypto Regulation Plan Approaches Finalization

The UK treasury has finally revealed the plans for regulating its cryptocurrency industry. This plan package also includes crypto regulations for limits imposed on foreign entities to sell into the country, advertisement restrictions, and more. These new regulations are brought into play following the recent FTX collapse filed in American bankruptcy court protection.

This package allows the Financial Conduct Authority to police and regulate this sector, and monitor the firms’ operations, product advertisements, sales, and more.

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UK Regulations

The crypto assets are regulated under the UK crypto laws imposed by the Financial Services and Markets Act of 2000, Order 2001, Payment Services Regulations of 2017, and Electronic Money Regulations of 2011. These regulations help determine a crypto asset’s nature, structure, and characteristics. Beyond these, the UK also imposes anti-money laundering and oversight regulations, appropriate disclosure, advertisement standards, and ESG considerations.

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Current UK Crypto Laws

• All the entities creating/issuing/marketing/buying/selling/holding/storing crypto assets should be registered with FCA for AML purposes under MLR.
• These firms should also conduct activities regulated under FMSA after acquiring 4A FSMA permission.
• The firm should comply with the financial promotion regime for marketing. Unregulated assets should not be promoted. If done, it will violate the Advertising Codes of ASA.
• The firms are scrutinized by Prospectus Regulation and Market Abuse Regulation acts.
• An asset holder will not receive the financial services compensation scheme benefits.

Bills And Laws In The Pipeline

UK is currently reviewing the FSM bill (Financial Services Market Bill). This bill will help to regulate crypto coins as a payment option, and the government is proposing amendments to regulate this currency. Some of the critical points of this bill are:

• Defining whether the crypto assets can be used for payments, electronic trading/transfer/storage, and defining the technologies used for the same.
• Recognizing DSA service providers, payment arrangements, and insolvency arrangements.
• Imparting power on HM Treasury to designate/regulate entities to raise funds by ICO (initial coin offering).
• Bringing crypto assets under FCA, treating them as a specified investment for regulatory purposes.

Wrapping Up

Crypto regulations are pretty complicated. Given the changes in UK crypto laws, we can find more regulatory scrutiny that would allow crypto to be a stable and practical currency. However, we have to wait to know how the regulations will move forward in the future.