After months of debate, the U.K.’s crypto regulatory framework is taking shape.
On Wednesday (Dec. 7), the U.K.’s House of Commons debated the Financial Services and Markets Bill (FSMB) which received cross-party support and will now go to the House of Lords for consideration.
Overall, the government got its way and successfully passed its amendments, including several related to regulating crypto assets.
And while a number of amendments tabled by the opposition received sympathy from Tory MPs, for example, Labour’s proposal to legally protect access to essential banking services, in the end, MPs toed the party line and successfully blocked the opposition’s major amendments.
Assuming the bill’s passage isn’t delayed by a lengthy process of parliamentary pingpong, the FSMB should become law in the spring of 2023, giving the Financial Conduct Authority (FCA) new responsibilities to oversee crypto asset service providers and setting the stage for stablecoins to be recognized as a form of payment.
The new rules will have broad implications for the crypto space, by bringing most crypto assets within the scope of rules for promoting financial investments, for example.
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That means that any crypto platform that wants to advertise in the U.K. will need FCA approval, and crypto ads will be held to the same standards as other investment advertisements. This will give the advertising regulator a stronger mandate to prevent misleading promotions and will require all crypto ads to be labeled with an appropriate risk warning.
Finally, the FSMB also creates the conditions for the Treasury to establish new financial markets infrastructure sandboxes. These will enable the testing of blockchain technology in market infrastructures by temporarily disapplying or modifying certain legislation for specific purposes.
While the FSMB is certainly a landmark piece of legislation, it is far from the only action being taken in the U.K. to better regulate the crypto sector.
Away from the main FSMB deliberations, the Treasury Committee met to discuss a wide range of consumer risks in crypto investing in a 2½-hour meeting that covered topics including crypto lending and non-fungible tokens (NFT).
