UK Treasury says Crypto Bill Should be Passed by Spring 2023

UK Treasury says Crypto Bill Should be Passed by Spring 2023

The landmark Financial Services and Markets Bill which will regulate the country’s crypto industry is expected to become law in Spring. The bill gives the UK’s Financial Conduct Authority (FCA) and the central bank, the Bank of England (BoE), more power over digital financial assets.

The Financial Services and Markets Bill (FSMB), UK’s wide ranging regulatory framework for the finance markets that will for the first time include cryptocurrencies, should be passed in the spring, said a spokesperson for the country’s Treasury in an email sent to crypto news outlet CoinDesk.

The FSMB, which has already been passed by members of the House of Commons after a debate, will have its second reading at Britain’s upper house of parliament – the House of Lords, on January 10, 2023. After that, the bill will be sent back to the lower parliament with amendments made by the House of Lords. Once both houses agree to the contents of the bill, it will be sent to the desk of King Charles III, who will sign the decree into law.

If the bill is passed, then crypto will be treated like any other sector of finance and will be regulated by the UK’s finance watchdogs, the Financial Conduct Authority (FCA) and Payments Systems Regulator. Currently, the FCA does not have the power to regulate crypto but can only ensure whether crypto companies register with the agency and comply with its anti-money laundering (AML) rules. Last month, following the collapse of FTX, the FCA proposed amendments to the FSMB which was approved by the House of Commons. The consultation paper was focused on bringing crypto under the direct watch of the financial regulator, who will also oversee registration of digital asset service providers (DASP) and promotional activities conducted by the firms.

UK Treasury says Crypto Bill Should be Passed by Spring 2023

Under the Financial Services and Markets Bill, crypto companies will be required to pass the FCA’s AML tests to be granted a licence to operate within the Kingdom. The FCA also noticed that earlier many of these companies leveraged provisions of the FSM Act of 2000 – which gave the regulator less oversight over the sector, to run promotional campaigns to attract customers all the while they were indulged in illegal activities like money laundering. In its paper, the financial watchdog also endorsed limiting the number of companies that will be allowed to advertise their products and services in the country. The regulator is looking into whether crypto firms that seek approval should be checked for having adequate systems, controls and processes in place to do so, and if they are able to maintain records of the financial promotions they conduct. Furthermore, the campaigns will also need to be approved by FCA-authorised firms that are currently few in number and are expected to grow with time as they start to better understand the sector. With these reforms, the FCA wants to assess the viability of the crypto products that are being promoted.

The FSMB will also give the Bank of England (BoE) the authority to regulate cryptocurrencies like Bitcoin (BTC) and Ether (ETH) and stablecoins, which are crypto tokens pegged to the value of a fiat currency, like Tether USD (USDT) and Circle USD (USDC).

“This is ofcourse an important milestone and will enable us to make substantial progress on the provisions within the Bill, including repealing and replacing burdensome pages of retained EU (European Union) law governing the sector, measures to embrace crypto asset technology, and measure to protect the consumer,” said the Treasury spokesperson.

Interested parties can review and respond to the FCA’s consultation paper which is open for a period of two-months. The Treasury is also preparing to publish its own paper proposing guidelines on how the sector will be regulated here onwards. With its Financial Services and Markets Bill, the UK is looking to become a global crypto hub under the guidance of former Chancellor of the Exchequer and current Prime Minister, Rishi Sunak.

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