The House of Commons today voted to make crypto assets regulated financial instruments. With Rishi Sunak as Prime Minister, it remains unlikely that the pound will suffer enough for the British to use Bitcoin as a hedge.
In the UK, a new amendment to the Financial Services and Markets Bill could regulate crypto assets like Bitcoin alongside stablecoins.
Lawmakers in the House of Commons voted in favor of a proposal by Andrew Griffith MP to bring cryptocurrencies under the banner of regulated financial services.
It is worth remembering that Rishi Sunak, former UK Minister of Finance and clearly pro-crypto, has taken over the position of Prime Minister. He envisions making the UK a crypto innovation hub.
FSM Bill Would Place Crypto under Existing Law
The proposal was part of a list of amendments to the original bill that would make stablecoins regulated forms of payment. The proposal includes cryptocurrencies under the Financial Services and Markets Act of 2000. It allows for the regulation of advertisements and the expulsion of unauthorized companies.
Among other details, the bill in question considers some extensions to the current laws, which would also address in part the cryptocurrencies known as stablecoins, those whose value would be related to some currency of legal tender that have been gaining popularity as a mechanism of digital payment for products and services.
“The gist here is to treat [crypto] like other forms of financial assets and not prefer them, but also bring them within the scope of regulation for the first time,” Griffith said.
The bill was introduced when Rishi Sunak was the Minister of Finance. So far, lawmakers have debated the bill in two sessions, one on October 19, 2022, and one on October 25, 2022.
Before being passed, the bill must go through the House of Lords and be subject to one more review, after which it can be signed into law by His Majesty King Charles III.
According to watcher.guru news website, Griffith mentioned that the treasury will consult various stakeholders and industry personnel to execute the framework and assess its risks and benefits.
In similar news, the South African Financial Sector Conduct Authority announced on October 19, 2022, that it would recognize cryptocurrencies as a financial product with immediate effect.
Will Bitcoin Have to Be a Hedge with the New PM?
The news of possible cryptocurrency regulation comes on the heels of a surge in British pound trading volume on cryptocurrency exchanges.
After former British Prime Minister Liz Truss introduced unfunded tax cuts on September 23, 2022, Britons flooded exchanges to buy Bitcoin with British pounds, causing transaction volume to jump 233%, compared to August 2022.
Proponents early on touted Bitcoin as a hedge against inflation because the currency is issued on a fixed schedule with a maximum supply of 21 million. But its correlation with stocks earlier this year has weakened that argument.
Also, the recent appointment of Rishi Sunak as the new Prime Minister of the UK could mean more conservative fiscal policies for the UK in the near future, which would imply stability for the pound. Sunak opposed Truss’s unfunded tax cut policies.
The failure of economic policy vindicated Sunak when it proved disastrous for the UK economy. After becoming Prime Minister, Sunak promised: “integrity, professionalism, and accountability, at all levels of the government I lead.”
By Audy Castaneda
