The UK is poised to advance its legislative framework for cryptocurrencies and stablecoins by mid-2024, as stated by Economic Secretary Bim Afolami at the Innovate Finance Global Summit.
Afolami emphasized the rapid progress being made to establish a comprehensive crypto regulatory regime. “We are now working at pace to deliver the legislation to put our final proposals for our regime in place,” he remarked.
This initiative follows the enactment of the Financial Services and Markets Act in June 2023, which positioned cryptocurrencies as regulated financial activities in the UK.
Afolami added, “Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time.”
The UK government aims to position the country as a leading hub for the cryptocurrency industry and plans to include such activities under the oversight of the Financial Conduct Authority (FCA).
Recent regulations already impacting the promotion of digital assets have been implemented, signaling a shift towards stricter oversight.
Duncan Ash, Head of Strategy at blockchain protection firm Coincover, reflected on the upcoming changes, stating, “While it remains to be seen exactly what new regulation may look like and how it will be enforced, it’s inevitable that the future of crypto lies within far more regulated and supervised parameters.”
The forthcoming regulations will encompass a variety of crypto-related operations for the first time, such as exchange operations and custodial services.
The FCA is expected to consult on an authorization regime for crypto firms shortly, and the government is also considering equivalence measures for foreign companies.
The legislative approach towards cryptocurrency in the UK has been gradual, initially focusing on fiat-backed stablecoins.
Plans are in place to extend regulations to other areas like algorithmic stablecoins and to incorporate crypto lending and trading under conventional financial regulations.
However, despite these developments, the crypto industry in the UK has encountered challenges, including delays and inadequate feedback from the FCA.
Recent rules limiting crypto promotions have caused some major firms to reduce their operations in the UK.
In early 2024, over 450 alerts were issued regarding illegal crypto advertisements within three months.
In related developments, Poland is also preparing to regulate the cryptocurrency sector later this year, with the KNF authorized to temporarily block cryptocurrencies for up to 96 hours on mere suspicion of unregulated trading.c