- The UK officially recognises crypto under its financial regulations with the recent enactment of the Financial Services and Markets Act 2023.
- The law aims to stimulate economic growth, unlock investment opportunities, and position the UK as a hub for crypto and tech innovation post-Brexit.
In a definitive stride towards broader acceptance of cryptocurrency, the United Kingdom recently embraced crypto within its legal framework through the Financial Services and Markets Act 2023. As an integral milestone following the UK’s EU departure, this legislation facilitates cryptocurrency regulation and its wider adoption, further solidifying the nation’s efforts to cultivate a conducive environment for digital assets.
Under the aegis of the new Act, regulatory scrutiny and accountability are expected to intensify, a measure set to reinforce the nation’s financial robustness. It calls for regular reporting and emphasizes conducting cost-benefit analyses, thus ensuring a transparent and controlled financial ecosystem.
The law aims to unlock economic potential by withdrawing previous EU legislation, a crucial strategy given the country’s current economic difficulties. With the UK exhibiting the highest inflation rate among G7 nations, coupled with a sluggish recovery from the COVID-19 pandemic, this move couldn’t be more timely.
Further, the enactment will facilitate the Edinburgh Reforms’ implementation, a suite of measures curated to revitalize the financial services sector. These include an expanded mandate for financial regulators, focusing on bolstering growth and nurturing international competitiveness.
As a significant highlight, the new regime will officially place cryptoassets, including stablecoins, under the UK’s financial regulators’ purview. Moreover, it facilitates the establishment of “sandboxes,” safe environments enabling blockchain and other emerging technologies to test their applications within financial markets.
According to Economic Secretary to the Treasury Andrew Griffith, 2023 represents a significant year for financial reforms. Griffith commended the legislation, saying it would “unlock billions in investment,” fuelling innovation and stimulating economic growth.
The UK, under the leadership of Prime Minister Rishi Sunak, has shown a strong commitment to becoming a crypto hub. Sunak, a known supporter of the industry, has welcomed tech companies relocating to Britain. For instance, OpenAI, the entity behind ChatGPT, recently announced plans to set up its first overseas base in London, further cementing the UK’s standing as a hub for technology.
King Charles’s recent approval marked the last formal stage for the bill, transforming it into an Act. As a result, the Financial Services and Markets Act now encompasses crypto and stablecoins within the scope of regulation. This monumental move empowers regulatory bodies such as the Treasury, Financial Conduct Authority, Bank of England, and the Payments Systems Regulator, to introduce and enforce sector-specific rules, reflecting the nation’s ambition to become a significant player in the world of digital finance.