May 22, 2024
Latest Cryptocurrency News

UK Passes Landmark Legislation to Recognize Crypto as Traditional Asset

The United Kingdom has taken a significant step forward in the world of cryptocurrencies and digital assets by officially introducing progressive regulations in this rapidly evolving sector. With the passing of the Financial Services and Markets Bill (FSMB), the UK has established itself as a global leader in crypto regulation, surpassing the United States in terms of acceptance despite having a smaller user base.

The FSMB, which received Royal Assent from King Charles on June 29, signifies a groundbreaking moment for the UK’s financial landscape. This landmark legislation recognizes cryptocurrencies as regulated financial activities, effectively bringing them under the purview of established market regulations. In an official statement, Andrew Griffith, the Economic Secretary to the Treasury, emphasized the importance of this development, saying, “This landmark piece of legislation gives us control of our financial services rulebook, so it supports UK businesses and consumers and drives growth.”

Beyond regulating cryptocurrencies, the bill also includes provisions that capitalize on the opportunities presented by Brexit. It is estimated that the FSMB could unlock approximately £100 billion for productive investment, fostering innovation and driving economic growth within the country.

In addition to these significant changes, the FSMB sets the stage for advancements in the blockchain sector and introduces several important measures:

  1. Enhanced scrutiny of financial services regulators to ensure clear accountability, appropriate democratic input, and transparent oversight.
  2. Removal of unnecessary restrictions on wholesale markets, aligning with the key outcomes of the Wholesale Markets Review.
  3. Protection of free access to cash by law and introduction of crucial safeguards for victims of Authorised Push Payment scams.
  4. Regulation of crypto assets to support their safe adoption in the UK.
  5. Establishment of ‘sandboxes’ that facilitate the use of new technologies, including blockchain, in financial markets.

By adopting regulations for cryptocurrencies, the United Kingdom follows in the footsteps of the European Union (EU). The EU Markets in Crypto Assets (MiCA) bill paved the way for other governments to regulate cryptocurrencies on a large scale. While the EU law will come into effect next year, its influence is already apparent. Just this week, German software giant SAP announced its choice of stablecoin USDC (USD Coin) for testing cross-border payments, aiming to address the challenges faced by businesses when sending money internationally.

This progressive move places the UK ahead of the United States, which is still years away from implementing comprehensive cryptocurrency regulations, according to Securities and Exchange Commission (SEC) Chair Gary Gensler. The US, home to over 54 million cryptocurrency users, should be concerned about potentially losing its user and developer base to more supportive policies in other countries. Recent events, such as Coinbase expanding its operations outside the US, highlight the impact of regulatory frameworks on attracting and retaining industry players. Moreover, the SEC’s ongoing clashes with major cryptocurrency exchange Binance and payment network Ripple (XRP) further accentuate the vulnerability faced by the US crypto ecosystem.

As the United Kingdom embraces regulations for cryptocurrencies, it sets a precedent for other nations worldwide. The implementation of comprehensive rules fosters trust, protects consumers, and provides a solid foundation for the growth of the digital asset industry. The UK’s proactive approach positions it as a hub for innovation and economic opportunities in the rapidly evolving world of cryptocurrencies.

Image by cryptostock from Pixabay

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