The UK government is accelerating its plans to bring the cryptocurrency sector under regulatory control, with Economic Secretary Bim Afolami announcing legislation targeting stablecoins, crypto staking, exchanges, and custody services by June or July 2024. This move comes after the UK passed the Financial Services and Markets Act in 2023, which paved the way for cryptocurrencies to be treated as regulated financial activities.
The new rules, expected to be in place by July 2024, will cover areas such as stablecoins, crypto staking, cryptocurrency exchanges, and custodial services. This move signifies the UK’s intent to strike a balance between fostering innovation in the crypto sector and safeguarding consumers from potential risks.
The UK government has been actively shaping its approach to crypto regulation. In October 2023, it proposed bringing fiat-backed stablecoins under the joint supervision of the Bank of England, the Financial Conduct Authority (FCA), and the Payment Systems Regulator. This move aimed to minimize risks associated with stablecoins, particularly when used for payments.
Afolami said at the Innovate Finance Global Summit,
Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time
The UK government has been keen to strike a balance between fostering innovation in the crypto sector and protecting consumers from potential risks. These new regulations aim to achieve this by bringing the industry under the umbrella of existing financial regulations.
This move by the UK aligns with a growing global trend towards regulating cryptocurrencies. With a significant portion of the crypto sector remaining unregulated, international organizations like the Financial Action Task Force (FATF) have called for a coordinated approach to mitigate risks associated with cryptocurrencies, such as fraud and money laundering.
