The recent election of Rishi Sunak as the Prime minister of the UK has taken the world by storm in an unprecedented manner. It also came as a breath of fresh air when the UK government announced developments on Crypto. Equity markets around the world (except for India) are seeing massive sell-offs because of recessionary fears, rising costs and weak earnings reports. Developments in Crypto come as a relief for investors looking to diversify their portfolios.
In this article, we will detail the recent announcements of the UK government on Crypto and what it could mean to the rest of the world.
Regulation of Crypto Ads
Andrew Griffith, Financial services and City minister added amendments to the existing Financial Services and Markets Bill to regulate Crypto Ads and ban unauthorised crypto services.
The measures have been received by the Industry on a positive note and the Crypto community has welcomed proposals to extend beyond Stablecoins which are digital assets pegged to a Fiat currency.
The member’s explanatory statement mentioned in the Financial Services and the Markets Bill amended on 21st October 2022 says –
“This new clause amends the Financial Services and Markets Act 2000 to clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate crypto assets and activities relating to crypto assets. Cryptoasset is also defined, with the power to amend the definition.”
The Act prohibits regulated financial activities to be carried out without permission. This amendment will draft regulations for financial activities related to Crypto and can propel the growth of an Industry which is clamouring for governments to provide conclusive guidelines.
Recognising Crypto as a Regulated Instrument
UK lawmakers voted in favour of recognising Crypto as a regulated financial asset. The bill includes measures to include stablecoins as a means of payment. These coins are less volatile since they are pegged to a Fiat currency or a commodity like Gold. These amendments were introduced during the Boris Johnson tenure when Rishi Sunak was the finance minister.
As stated by Andrew Griffith “the goal is to not give preferential treatment to Crypto Assets and ensure that they fall under the scope of regulation”.
The recognition of Crypto as a regulated financial asset will do away with the major uncertainty gripping investors.
The UK treasury seeks to implement a consultative approach with the stakeholders to ensure that the drafted amendments capture the benefits of Crypto and highlight the risks of the same.
The Way Forward
So will Crypto be regulated in the UK? As of now, the rules have to be passed through the Upper house of the UK parliament for consideration of the amendments and then be approved by King Charles III before being converted into law.
Rishi Sunak is known to be a pro-Crypto advocate and he aims to make UK the global hub for crypto. Stablecoins being considered as a means of payment could be the first step for this change.
The UK government’s willingness to regulate Crypto is one of the first steps taken by a major economy to regulate Crypto. The US government has also recently released guidelines for responsible Digital Asset Development. India is also taking steps to table a technology-driven regulatory framework for Crypto assets during the G-20 summit next year.
Major developments are happening in the industry with major companies like Google and Meta making inroads into the adoption of Crypto. Several other consumer-facing businesses are using NFTs to increase outreach. It is good to know that changes are not just happening on a technological front but also on a regulatory front. These developments pave a road map for the next wave of a technological revolution with Crypto taking centre stage.