Last week, King Charles signed the Financial Services and Markets measure, completing the process for the measure to become law and giving regulators the power to monitor cryptocurrencies and stablecoins. This step, known as royal assent, is merely a procedural formality following the lawmakers’ agreement and effectively transforms the bill into the Financial Services and Markets Act.
Hailed as a vital component of the government’s vision, the HM Treasury asserts that the act plays a central role in fostering an open, sustainable and technologically advanced financial services sector. Financial Services Minister Andrew Griffith emphasized that the act provides the United Kingdom with full control over its financial services rulebook after its exit from the European Union. He stated that this authority enables the regulation of crypto assets to ensure their safe adoption within the UK.
Originally introduced in July 2022, the bill significantly enhances regulators’ power over the financial system, particularly concerning cryptocurrencies. During parliamentary debates, amendments were introduced, classifying all crypto activities as regulated and introducing supervision of crypto promotions. The bill will also encompass stablecoins within the scope of payment regulations.
In light of the FTX collapse, Griffith urged the commonwealth’s treasury committee not to conflate the incident with the entirety of cryptocurrency. He advocated for a “well-calibrated regulatory response” that acknowledges the potential opportunities that lie within the technology.
The act further paves the way for the establishment of “sandboxes” that promote the implementation of innovative technologies such as blockchain within financial markets. It also holds implications for enhancing the accountability and scrutiny of financial services regulators. It places emphasis on transparency, regular reporting, and cost-benefit analyses to facilitate the growth of the UK economy and bolster its international competitiveness.
The Financial Conduct Authority, the UK Treasury, the Payments Systems Regulator and the Bank of England will soon be granted the power to enact and enforce regulations for the industry.
Several stakeholders praised the official acknowledgment of crypto in the UK, including Sei Labs cofounder Jeff Feng, who termed it a major turning point for the larger cryptocurrency industry. He said that the move represents the growing adoption of digital assets, which is significant as nations vie for supremacy in the crypto and IT industries on a global scale.
The treasury has been engaged in consultations for its proposed rules for the sector since February, aligning with the Conservative Government’s aspiration to transform the country into a prominent crypto hub. Specific rules tailored to the crypto sector could be implemented within the next 12 months.
The strides being made to streamline the way the crypto industry will be regulated within the UK is clearly something that companies such as Marathon Digital Holdings Inc. (NASDAQ: MARA) would like to see in other major markets, such as in the United States.
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