The upper house of the UK Parliament recently approved a bill establishing the first comprehensive crypto-asset regulation in the country. The bill, which was first introduced last year, proposed the regulation of cryptocurrencies and amendments to the UK Banking Act 2009 which outlines the authority of the central bank to oversee payment networks.
The UK’s Financial Services and Markets Bill
Since it was introduced in July 2022, the UK’s Financial Services and Markets Bill, as it is called, the bill has gone through two previous readings and debates over the past year. Now, it has been approved in its third reading in the House of Lords and will now enter into the final reading.
However, it seems legislators are already contented with the bill after the second hearing, as no changes to the bill were suggested ahead of the third reading. Here, both chambers of the Parliament can discuss any changes to the regulations before it is passed over for “Royal Assent” for a signature from King Charles III.
#HouseOfLords conducts ‘tidy up’ of the #FinancialServicesBill from 3.15pm before it is returned to @HouseOfCommons to consider Lords changes.
Find out more https://t.co/kZYuE22bId
Watch online https://t.co/MXe7B0XhMX pic.twitter.com/hPec0CXTm1
— House of Lords (@UKHouseofLords) June 19, 2023
Spanning over 340 pages, the Financial Services Bill provides rules for digital currency exchanges, stablecoins, and crypto-related tokens. By establishing clear rules around stablecoins, preventing misuse of digital assets, promoting of cryptocurrencies, and protecting consumers, the bill aims to legitimize digital assets in a controlled manner.
Post-Brexit Crypto Ambitions
The new crypto bill is part of the UK’s wider plan for its financial system after leaving the European Union. Last month, the European Union (EU) enacted its own version of regulations in the MiCA law, which is designed to bring crypto-assets, issuers, and service providers under the control of a regulatory framework.
Legislators in the world continue to strive for crypto regulations within their boundaries, but regulation needs to strike a balance between managing risks and allowing innovation. Of course, some worry regulations may stifle innovation if taken too far. The Financial Services And Markets Bill is an attempt at this balance, though its impacts won’t be fully clear until the final legislation takes effect.
Last week, the UK’s Financial Conduct Authority (FCA) recently proposed some strict new rules for how crypto companies can market their products and services to customers. The FCA banned crypto firms from publishing misleading adverts that overstate potential profits or understate the risks.
With the industry continuing to evolve rapidly, some countries like the UK are looking to establish themselves as a crypto hub. By approving this new bill, lawmakers aim to do just that by creating an environment where these businesses can thrive.
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