Crypto Goes Mainstream: UK Embraces Stablecoins as Legitimate Currency
UK Sets the Stage for Stablecoin Payments: Financial Services Bill Passes in House of Lords
In a major stride towards regulatory clarity, the UK's Financial Services and Markets Bill (FSMB) has been successfully passed by the House of Lords, recognising cryptocurrencies as regulated activities and stablecoins as a viable means of payment. The bill, spanning over 340 pages, was introduced in July last year with the aim of granting regulators greater authority over the country's financial system. Since its inception, the bill has undergone several amendments, including provisions for oversight of cryptocurrency promotions.
The UK's regulatory approach aligns with that of the European Union (EU), which recently introduced the Markets in Crypto Assets (MiCA) legislation to provide comprehensive regulation for the crypto sector. Acknowledging the growing global presence of crypto conglomerates, the EU envisions the need for international cooperation and an updated version of MiCA. Despite this, the FSMB will return to the lower house of parliament for finalisation and alignment with EU standards.
Once both chambers of Parliament approve the bill, it will be subject to royal approval before becoming law. However, the bill's iterative nature means it may undergo back-and-forth exchanges between the chambers until a consensus is reached.
The approval of the Financial Services and Markets Bill (FSMB) by the House of Lords marks a significant milestone in the UK's journey towards recognising cryptocurrencies as regulated activities and stablecoins as a legitimate means of payment. The wide-ranging bill, spanning over 340 pages, was introduced to empower regulators and leverage post-Brexit freedoms to strengthen the UK's financial system. While the original bill aimed to regulate stablecoins under the country's payments rules, subsequent amendments expanded its scope to include all cryptocurrencies as regulated activities and introduce measures to supervise crypto promotions.
The UK government seeks to equip regulators with the necessary powers to establish comprehensive rules for the crypto sector. The Treasury, the government's financial arm, has been actively consulting on specific rules for the sector, with Economic Secretary to the Treasury Andrew Griffith suggesting that new rules could be implemented within 12 months. The UK's efforts are driven by the goal of catching up with the EU, which recently finalised the Markets in Crypto Assets (MiCA) regulation with a particular focus on stablecoins. The FSMB will now be returned to the lower house of Parliament for final revisions and consensus.
The Financial Services and Markets Bill has taken significant strides towards potential regulation of crypto in the UK. Lawmakers in the House of Lords, the upper house of the UK Parliament, have been advocating for the passage of the bill, which aims to strengthen the country's financial services industry and support the adoption of cryptocurrencies. Following a third reading in the House of Lords, the bill will now return to the lower house, the House of Commons, for further consideration and potential amendments.
Introduced to the UK Parliament in July 2022, the Financial Services and Markets Bill aimed to ensure the UK's continued prominence in the financial world post-Brexit. The original version of the bill granted regulatory authority over digital assets, while the recent amendments from the House of Lords did not introduce any changes specifically relevant to the crypto industry. The bill's passage through the House of Lords on June 19 was part of a plan to refine and optimise its effectiveness. Baroness Joanna Penn emphasised the bill's objective to deliver a regulatory framework that provides regulators with new responsibilities while maintaining clear accountability, democratic input, and transparent oversight.
The impact of global cryptocurrency regulation is influencing businesses' choices of jurisdiction. Recent crackdowns by US authorities on exchanges such as Coinbase and Binance have resulted in legal entanglements. The UK's proactive steps in stablecoin regulation and crypto recognition aim to provide a favorable environment for businesses in the sector and establish clear guidelines for their operations.
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