The bill aims to make wide-ranging changes to the UK financial sector, including the introduction of robust stablecoin and crypto asset regulations.
The US may be on a mission to strangle the crypto industry out of existence, but in other parts of the world, the show goes on. In the UK, a new bill proposing stablecoin and crypto regulation has received approval from both Houses of Parliament (Commons and Lords), and is likely to come into effect in the near future.
The bill, known as the Financial Services and Markets Bill (FSMB), must now undergo two final stages: a Consideration of Amendments and the Royal Assent.
Unlike MiCA, which is a legal framework dedicated exclusively to crypto assets, the FSMB is a broader finance bill that seeks to make huge changes to the UK financial sector in light of Brexit.
The bill aims regulate stablecoins and other crypto assets. It appears to take an open-minded approach to crypto, outlining its mission to “reduce regulations in order to enable technological innovation” in the UK financial market infrastructure.
The bill honours the UK’s goal to become a “global crypto hub”.
In April last year, the UK government said it intended to make the UK a global hub for cryptoasset technology. Economic Secretary Andrew Griffith has taken a particularly friendly approach to regulating crypto, winning favour with Coinbase CEO Brian Armstrong back in April.
Not all crypto assets will fall under the scope of the FSMB, though.
The bill defines a “digital settlement asset” as “a digital representation of value or rights, whether or not cryptographically secured, that (a) can be used for the settlement of payment obligations; (b) can be transferred, stored or traded electronically, and (c) uses technology supporting the recording or storage of data (which may include distributed ledger technology)”.
The explanatory notes state that this definition includes stablecoins and other cryptoassets, but it is opposed to “other potentially more volatile cryptoassets”.
Stablecoins aside, the UK is also one of the 100+ countries exploring the adoptability of a central bank digital currency (CBDC). In July 2022, the Bank for International Settlements (BIS) and the Bank of England (BoE) launched a comprehensive study that developed 33 API functionalities and explored more than 30 retail CBDC use cases.
The findings were generally positive, with Francesca Hopwood Road, Head of the BIS Innovation Hub London Centre stating the study “can make a significant contribution to how organisations across the globe are thinking about and engaging with the design of retail CBDC systems.”
Jon Cunliffe, Bank of England Deputy Governor, also said last week that a final decision on whether the UK will launch a CBDC is still “some years” away, but the odds of adoption stand at around “seven out of ten“, according to a report by Bloomberg.
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