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- 1 The House of Lords approved FSMB Crypto regulations.
- 2 The bill refers to digital assets as “digital settlement assets”.
The U.K. is trying to install crypto regulations, and on June 19, 2023, the Financial Services & Markets Bill (FSMB) was approved by the House of Lords, thereby inching closer to reality. The long-awaited FMSB was originally intended to regulate stablecoins, but was later amended to treat digital assets as a regulated activity.
U.K. Crypto and Stablecoin Laws Approved by House of Lords
The bill was initially introduced in July 2022 to capitalize on the opportunities presented by Brexit, aiming to strengthen regulatory oversight over the financial system in the United Kingdom. Originally, the 340-page bill was only centered around stablecoin regulations. Later on, it was altered to include digital assets as a regulated activity. Furthermore, the bill refers to cryptocurrencies as “digital settlement assets” or DSAs. The bill treats digital assets as “a digital representation of value or rights.”
The United Kingdom wants the FSMB to provide regulators with the power to set rules regarding digital assets, an issue which is under consultation by the Treasury. The specifics regarding the regulations shall surface in nearly 12 months, as per Andrew Griffith, the Economic Secretary of the Treasury.
With this step, the U.K. is trying to match the European Union, which will soon have a comprehensive regulatory framework for crypto regulations called MiCA. The Market in Crypto Assets framework also provides credibility to stablecoins. It has been published in the Official Journal of the European Union and will come into full effect by December 30, 2024.
The DSA regulations come under Schedule 6 in the new bill, proposing certain amendments to the U.K. Banking Act of 2009. The act established the oversight of central banks on the payment systems. The bill is also extended to the existing Financial Services Act of 2013, widely known as Banking Reforms. It shall include payment systems involving DSAs.
The rules aim at altering the banking act by including DSA service providers in the mix. It would include exchange platforms, digital asset issuers, and wallet providers. Additionally, it shall establish certain rules and standards, or conditions for accessing and participating in the payment system of DSAs.
As per the documents, the Treasury still has the power to create and modify the regulations as they see fit. Furthermore, they will have to consult the United Kingdom’s Financial Conduct Authority (FCA), the Bank of England, and other regulatory bodies before making any alteration to Schedule 6.
FCA Calls for Amendments to FSMB
It is still months before the regulations will be implemented, but the Financial Conduct Authority (FCA) of the United Kingdom asked for certain alterations to FSMB in the first week of June 2023. They have requested a few rules to be changed and to classify digital assets as “restricted mass market investments” along with providing statutory risk warnings.
As per the amendment, the distribution of incentives for referring a friend would be banned. The ownership of digital assets in the United Kingdom has nearly doubled between 2021 and 2022, which is another reason to speed up the regulation procedures.
Additionally, the digital assets firms operating in the U.K. and registered with the FCA must abide by the anti-money laundering regime. Earlier this year, in March, the Treasury argued that the legislation will help to “safeguard against misleading crypto asset promotions”.
Yesterday the Government laid legislation to safeguard against misleading cryptoasset promotions.
— HM Treasury (@hmtreasury) March 28, 2023
Subject to parliamentary time & approval, this measure will likely be in force by late 2023 & apply to all cryptoasset promotions made to UK consumers from the UK or abroad 🌎.
On May 2, 2023, the House of Lords agreed to go ahead with the amendments in a committee meeting. It was then voted on in the House of Commons on May 3, 2023. This amendment will allow the Financial Conduct Authority to regulate digital assets companies under the existing regulations surrounding promotional methods.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
