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Rocket Boost for the UK Economy: Royal Approval of Crypto Regulation

Jun 30, 2023

UK Takes Landmark Step with Royal Approval of Financial Services and Markets Bill

In a significant development for the crypto industry, Britain has moved closer to establishing a fully regulated framework with the royal approval of the Financial Services and Markets Bill. King Charles III granted Royal Assent to the bill on June 28, marking a crucial milestone in the country's efforts to "regain control of the financial services rulebook." The bill, which received approval from the upper chamber of the UK parliament on June 19, includes provisions to bring crypto assets and stablecoins under regulatory oversight.


Describing the bill as a "rocket boost" for the UK economy, the Treasury emphasised its role in supporting the safe adoption of crypto assets within the country. Economic Secretary to the Treasury, Andrew Griffith, highlighted the significance of the legislation, stating that 2023 is proving to be a transformative year for reforming the financial services industry. Griffith noted, "This landmark piece of legislation gives us control of our financial services rulebook, so it supports UK businesses and consumers and drives growth."


During the bill's formulation, amendments were made to include crypto as a regulated financial activity and to supervise crypto promotions and advertising. Stablecoins have also been incorporated into the bill's oversight of payment regulations. This comprehensive approach to regulation in the UK could potentially attract more crypto companies from the United States, which is currently grappling with regulatory uncertainties and a lack of clarity on the asset class.


In contrast to the UK's proactive approach, the United States has been embroiled in debates over which agency should oversee crypto assets. The Securities and Exchange Commission, led by Chair Gary Gensler, has independently classified all digital assets except Bitcoin as securities, while Congress has yet to officially classify them as such. This uncertainty has led to an exodus of companies, talent, innovation, and capital from the US crypto industry.


UK Crypto and Stablecoin Rules Pass into Law


Following King Charles III's approval, the UK bill granting regulators the power to supervise crypto and stablecoins has officially become law. Royal assent, the final procedural step after agreement from lawmakers, has transformed the Financial Services and Markets Bill into the Financial Services and Markets Act 2023, thereby incorporating measures to regulate crypto and stablecoins. The upper chamber of Parliament approved the bill last week, solidifying the UK's control over its financial services rulebook and enabling the regulation of crypto assets to support their safe adoption within the country.


The Financial Services Act 2023, which gives regulators increased power over the financial system, including crypto, sets the stage for the UK to become a leading global crypto hub. The Treasury, Financial Conduct Authority, Bank of England, and the Payments Systems Regulator will soon introduce and enforce specific rules to regulate the sector. Consultations on proposed rules have been ongoing since February, aligning with the Conservative Government's ambition to position the UK as a dynamic and competitive financial services centre.


The new regulatory framework is expected to provide clarity and stability to the crypto sector. Economic Secretary to the Treasury, Andrew Griffith, expressed optimism about the future, stating that new specific rules for the crypto industry could be established within the next 12 months. This progress aligns with Prime Minister Rishi Sunak's vision of making London a global crypto hub.


UK Crypto Regulation: A Key Step towards a Competitive Financial Services Sector


Yesterday, King Charles III's signature transformed the UK bill into law, granting regulators the power to oversee stablecoins and crypto. The Financial Services and Markets Act 2023, which repeals outdated laws imposed by the EU before Brexit, aims to unlock billions in investment and foster innovation to drive economic growth. The bill's passage represents a crucial step toward strengthening the UK's competitiveness as a global financial centre.


While the European Union has made substantial progress in establishing regulatory frameworks through the European MiCA, the UK now has the authority to regulate stablecoins and cryptocurrencies independently. The Financial Services and Markets Act 2023 empowers the Treasury, Financial Conduct Authority, Bank of England, and the Payment Systems Regulator to introduce and enforce concrete rules for the sector.


The impact of the new UK crypto regulation on stablecoins and cryptocurrencies remains uncertain, as decisions and discussions are ongoing among government authorities. The convergence with EU regulations and the establishment of a dedicated group of experts to advise on legal issues surrounding digital assets may shape the UK's approach to crypto regulation. Clearer rules and guidelines for crypto operators are expected to be determined within the next year, bringing greater transparency and compliance to the industry.


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