The UK has repeated its commitment towards becoming a cryptocurrency and digital asset hub despite the turbulent year in the sector, where big players such as FTX and Terra Luna amongst others went bust.
MP’s and financial experts have expressed their opinion on the potential benefits and risks of allowing the crypto industry to expand within the UK. On January 10th, Andrew Griffith, Economic Secretary to the Treasury, updated the Treasury Select Committee on the latest crypto industry developments, and conveyed his hope that the government will eventually embrace the disruptive technology, such as distributed ledger and blockchain, from crypto-assets such as Bitcoin, Ethereum, and Cardano.
The committee further pointed out the potential underlying risks of future government policy, especially after the collapse of crypto exchange FTX.
However, the UK government is keen to establish a regime for crypto-assets that will foster innovation and growth within the UK economy, while also ensuring consumers have the right information by legislating for financial promotions for crypto assets.
Mr. Griffith explained that the next steps would be for the government to produce a consultation document about the regulation of the crypto asset sector in general, and in conjunction with the Bank of England about a sovereign UK central bank digital currency (CBDC).
At the same time, The Financial Services and Markets Bill, which sweeps parts of crypto into financial regulation, came under scrutiny in Parliament, where members of the House of Lords called for greater regulation for crypto assets after a catastrophic 2022 for the sector.
The Bill has the power to regulate stablecoins used for payments and sets restrictions on advertising crypto-assets to UK citizens. Upper house lawmakers recently had the chance to flag concerns on the bill, and draft amendments after having the opportunity for a second reading session.
One of their main concerns raised by Jonah Hill, member of the upper chamber, was that emerging innovation technology and preventing its abuse is going to pose some serious capacity and structural challenges to the FCA. The Financial Services and Markets Bill will provide the FCA with greater powers to supervise crypto-assets, however, Mr. Hill later expressed his concerns that the regulator might not yet be ready to take up this task.
As the future of the sector remains uncertain, firms carrying out crypto related activities seeking FCA authorisation are currently faced with additional scrutiny by the regulator. This may lead some applicants to seek registration or permissions from other jurisdictions. The FCA announcement is welcomed and is being monitored closely by many within the crypto space.
How can Complyport help?
Complyport’s Cryptoasset Team can help regulated firms with their cryptoasset registrations. If this article has raised any questions about the upcoming changes to crypto regulations, or you think your firm may require assistance, contact Jan Hagen via jan.hagen@complyport.co.uk to book a free consultation.
About Complyport
Complyport is a market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
We specialise in supporting the UK financial services industry with compliance guidance, advice and best practice including support with:
- Cryptoasset registration
- Financial Promotions guidance, support, and management software solutions
- Prudential support, IFPR, ICARA and financial resilience advice
- Operational resilience & Cybersecurity advice
- CASS advice and protections of client assets
- Compliance managed services and resourcing compliance personnel
- Financial Crime and Forensics
- Consumer Duty implementation advice
- Skilled Person Reviews and Regulatory Investigation
Contact our Head of Regulatory Business Solutions, Jan Hagen via email at: jan.hagen@complyport.co.uk to book a free consultation.
