Stablecoin: New Crypto Regulation in the UK
Yesterday, King Charles III signed into law the UK bill giving regulators the power to oversee stablecoin and crypto.
The bill had already been passed by parliament, so the king’s signature effectively made it a law of the land.
Regulations: The New Crypto and Stablecoin Account
The UK government’s official press release states that the Financial Services and Markets Bill will “rocket boost” the UK economy by enabling the creation of an open, sustainable and technologically advanced financial services sector.
The new law, known as the Financial Services and Markets Act 2023, is an important step in realizing the UK Government’s vision of growing the economy by strengthening the UK’s competitiveness as a global financial centre.
On the other hand, the current prime minister, Rishi Sunak, is a supporter of cryptocurrency, and in 2022, when he was not yet prime minister, he said they wanted to regulate stablecoins.
The idea is to turn London into a global crypto hub.
The Financial Services and Markets Act 2023 does not focus on cryptocurrencies and stablecoins, but it does contain a section on them.
In particular, it repeals old laws that the UK was required to implement by the EU before Brexit, with the aim of freeing up billions in investment to innovate and grow the economy.
The government says the new rules will put the UK on track to become one of the most dynamic and competitive financial services companies in the world.
The impact of crypto regulation on the stablecoin market
Following the entry into force of the European MiCAr, the United Kingdom now has a regulatory framework for stablecoins and cryptocurrencies.
However, the Financial Services and Markets Act 2023 only gives the government the task of regulating the crypto sector, so it is up to the Treasury, the FCA, the Bank of England and the Payment Systems Regulator to put in place and enforce concrete rules to regulate the industry.
Instead, in the European Union, almost everything has already been decided, and all that remains is for individual countries to transpose and integrate the new rules into their regulatory codes.
All this is expected to happen in 2024, so nothing has changed in terms of regulations for now. But in both the EU and the UK, regulations should finally be clarified next year and the rules crypto operators will have to apply are certain.
Therefore, it is currently not possible to know what the real impact of the new UK crypto regulations will be on stablecoin and cryptocurrencies. Since everything is up to the government, it is not even possible to guess with certainty what will happen.
In the EU, on the other hand, the picture is already clearer and it cannot be ruled out that the concrete decisions that will be taken in the UK will closely follow those that have already been taken in the EU.
In particular, the Law Commission has already stated that crypto assets in the UK can be recognized as a new category of personal property that encompasses all digital assets, as these digital assets, such as cryptocurrencies and NFTs, do not fall within the traditional categories. of existing personal property.
The hypothesis doing the rounds is that the government will set up a dedicated group of experts to advise on legal issues related to digital assets.
The British approach
The UK’s approach to crypto regulation appears to be different from other countries, especially when compared to the US and EU.
For example, in Switzerland, which seems to be the most important European crypto hub so far, regulations are specific and have been around for several years.
Dubai, on the other hand, seems to be more tolerant.
In the EU it doesn’t seem very lax and won’t come into full force until next year.
It’s just not there yet in the US.
The UK has taken a softer and more dynamic approach, very different from both the EU and Switzerland. Since the US has decided not to follow the rigid approach of the EU for the time being, it is conceivable that they will take an example of the UK’s original approach and leave the actual regulation to government authorities.
The UK’s decision seems aimed at giving crypto operators more leeway precisely to attract them to become a crypto hub. In that respect, it appears to be closer to Dubai than to Switzerland and the EU.
The ultimate question is which approach will yield more, not only from an economic point of view, but especially from a legal and social point of view.
While a more inclusive approach will certainly help the crypto sector grow, it could also create societal problems if, for example, it encourages an overly unscrupulous attitude on the part of crypto operators themselves.
For example, in the US, we have seen what it means not to regulate crypto exchanges with the FTX case, which has done a lot of damage to the crypto sector, especially to investors.
In Switzerland, which has been Europe’s main crypto hub for years, there have apparently been no such problems.