On June 28, King Charles III gave Royal Assent to a landmark bill to “regain control of the financial services rulebook”.
The Financial Services and Markets Bill 2023 was passed by the upper house of the UK parliament on June 19. It includes measures to bring crypto assets and stablecoins into the realm of regulation, giving them powers to oversee the digital asset sector.
The royal assent, which represents a merely representative step in the legislative process, comes just over a week after the UK’s upper house of Parliament, the House of Lords, voted in favor of the bill. The king’s signature effectively converts the legislative proposal into law.
Originally introduced in July 2022, the new legislation gives regulators greater authority and oversight over the financial system, including cryptocurrencies; while establishing the creation of experimental programs to facilitate the use of new technologies such as Blockchain in financial markets.
“The Financial Services and Markets Act 2023 is critical to fulfilling the Government’s vision of growing the economy and creating an open, sustainable and technologically advanced financial services sector,” His Majesty’s Treasury said in a statement published on 29 June on their website.
Rocket Boost for the UK Economy
The Treasury described the bill as a “breakthrough boost” for the UK economy, which has been hit during the pandemic and its exit from Europe.
Treasury Economic Secretary Andrew Griffith said: “2023 is proving to be a banner year for reforming our financial services.” He further asserted that “This landmark legislation puts us in control of our financial services rulebook, so it supports UK businesses and consumers and drives growth.”
During discussions in Parliament, some amendments were added to the lengthy 340+ page legislative document, including proposals to treat all cryptocurrencies as a regulated activity and measures to monitor digital currency promotions and/or advertising campaigns. The proposal also covers the regulation of stablecoins under the country’s payment rules.
The legislation could attract more crypto companies to the UK from the US, which is currently trying to drive them out by ‘bombarding’ the industry with lawsuits.
Rather than implementing their own regulatory framework, policymakers in the United States have been grappling with which agency will control the asset class. Furthermore, the Securities and Exchange Commission and its Chairman, Gary Gensler, have acted on their own to proclaim that all digital assets, other than Bitcoin, are securities.
Congress has not yet officially listed them as such, and the uncertainty is causing an exodus of business, talent, innovation, and capital.
New Crypto-Specific Rules Are On the Way
As a result of the implementation of the new law, the various watchdogs – the UK Treasury, the Financial Conduct Authority, the Bank of England, as well as the Payment Systems Regulator, will be able to introduce and enforce new specific rules to regulate the sector.
According to the local government, this effort puts the UK on the path to becoming one of the “most dynamic and competitive financial services centers in the world”.
The Treasury has been consulting on its proposed rules for the sector since February in line with these objectives. Furthermore, Andrew Griffith, the Treasury’s economic secretary, already announced in April that specific laws aimed at regulating the digital currency industry could arrive in the coming 12 months.
“This landmark legislation puts us in control of our financial services rulebook, thereby supporting UK businesses and consumers and driving growth,” Griffith said in yesterday’s note.
By Audy Castaneda