The United Kingdom has taken a significant step towards embracing the digital economy by passing a bill recognizing cryptocurrency as a regulated financial activity. Approved by King Charles, marking the last formal stage of the bill becoming law, the move signals an important shift in the country’s approach to digital currencies and promises to usher in a new era for the crypto industry in the UK. The bill, known as the Financial Services & Markets Act 2023, represents a bold stride towards regulatory clarity in the world of digital finance, a topic that has seen heated debates and polarized opinions across the globe.
According to Economic Secretary of the Treasury, Andrew Griffith, the decision is a significant one. He emphasized that the new legislation hands over control of the UK’s financial services rulebook, which in turn will benefit businesses and consumers and drive growth.
A new era for crypto in the UK
On June 20, the bill had already gained endorsement from the UK’s House of Lords, marking a major step in the country’s efforts to regulate crypto-assets and their providers. Initially introduced in July 2022, the legislation saw a series of transformations before reaching its final form. While originally focusing on regulating stablecoins, amendments introduced during parliamentary debates expanded the bill’s scope to treat all cryptocurrencies as regulated activities. This broadened regulatory perspective included the provision of supervision for crypto promotions, revealing a comprehensive approach to integrating digital currencies into the UK’s financial system.
Now approved by King Charles, the Financial Services & Markets Act 2023 has officially become law. This comes as a result of a multi-stage parliamentary process involving a final reading of the bill by both Houses of Parliament, agreement on amendments, and ultimately, the Royal Assent. The last time a bill was denied by a Monarch was in 1708 with the Scottish Militia Bill, highlighting the importance and gravity of this recent development in the UK.
Implications and future prospects
The implications of the Financial Services & Markets Act 2023 are far-reaching. It empowers key regulatory bodies – the UK’s Treasury, Financial Conduct Authority, Bank of England, and the Payments Systems Regulator – to introduce and enforce rules to regulate the crypto sector. Also, the Act aims to provide a clear regulatory framework that supports the safe adoption of crypto assets in the UK post-Brexit. This power shift puts the UK at the helm of its financial services rulebook, allowing it to navigate the complex and rapidly evolving world of crypto-assets on its own terms.
Since February, the Treasury has been consulting on proposed rules for the sector and aligns with the Conservative Government’s objective to transform the UK into a global crypto hub. Specific rules for the crypto sector could be introduced within the next 12 months, according to Andrew Griffith, the Financial Services Minister.
The approval of the Financial Services & Markets Act 2023 sets the stage for a new chapter in the UK’s approach to digital finance. By embracing the transformative potential of cryptocurrencies and recognizing their place within the regulated financial activity, the UK is positioning itself as a global leader in the crypto industry.