The UK is poised to implement a new law by mid-2024, regulating cryptocurrency and stablecoins, as announced by Economic Secretary of the Treasury, Bim Afolami, during the Innovate Finance Global Summit. This legislation aims to establish the UK as a leading destination for crypto businesses by introducing a comprehensive regulatory regime. The framework will cover various aspects of the crypto industry, including exchange operations and custodial services, ensuring market fairness and protecting consumer interests.
FCA to enhance oversight with upcoming consultation
The Financial Conduct Authority (FCA) is preparing to launch a consultation on the licensing procedures for crypto firms soon. This move is part of the broader effort to enforce the Financial Services and Markets Act passed in June 2023, which includes cryptocurrency as a regulated financial activity. By setting strict standards and clear regulatory guidelines, the FCA seeks to provide a secure trading environment for both local and foreign companies, thereby fostering fair competition.
Challenges and industry response
Despite the government’s efforts to streamline regulations, the crypto industry in the UK faces hurdles. Crypto firms have expressed concerns over the slow feedback from the FCA regarding their applications, which has affected their operational capabilities. In response to regulatory pressures, some of the largest players in the crypto market have had to scale back their services in the UK. Furthermore, in February 2024 alone, the FCA identified and required disclosure of approximately 450 illegal crypto advertisements, underscoring the regulatory challenges and the need for compliance.
This regulatory push in the UK not only enhances its position in the global crypto market but also sets a benchmark for other nations considering similar regulations. As the UK refines its legal frameworks, it serves as a litmus test for the global crypto industry, balancing innovation with consumer protection. This dynamic regulatory environment is expected to influence other countries, including Poland, which has also placed crypto regulation high on its agenda for the year.