As the UK has left the European Union, experts are predicting that by 2024, new crypto regulations could be in place. This news is a relief for many cryptocurrency investors and users who have eagerly awaited an updated framework from the government.
The UK has already taken steps towards embracing digital currencies and blockchain technology by allowing banks to use stablecoins for settlements. This move is seen as a major step forward in terms of regulation, which will help create more trust within this sector and encourage further investment in cryptocurrencies.
In addition to accepting stablecoin adoption for bank settlements, other proposed regulatory measures include introducing anti-money laundering (AML) rules on all exchanges operating within the country’s borders, requiring customers’ identity verification before they can trade, setting up consumer protection guidelines, creating tax laws related to cryptocurrency transactions, providing guidance on how ICOs should be conducted legally in line with existing securities law frameworks, establishing cybersecurity standards specific to cryptos such as wallets or storage services, etc., and clarifying taxation rules around trading profits made through cryptocurrencies, including capital gains taxes, among others.
All these steps are aimed at making it easier for businesses to manage digital assets while also protecting consumers from potential fraud or exploitation when engaging with them online.
The UK government is expected to not only focus on regulating but also promote innovation within this space so that companies can continue innovating without worrying about any legal repercussions down the road due to their activities being deemed illegal under current legislation. It remains unclear exactly what form these regulations will take when implemented, but one thing is certain: if done correctly, they could provide much-needed clarity over how people should handle their investments in cryptos going forward.
UK government’s progress toward becoming Europe’s crypto hub
As the UK continues to embrace digital asset technology and investment, Prime Minister Rishi Sunak’s vision of turning the country into a hub for crypto assets is slowly coming to fruition. In April 2023, he first announced his intention for this goal, and since then there has been steady progress toward it.
In October 2022, amendments were made to the Financial Services and Markets Bill (FSM Bill) that would allow new payment apps to be licensed and give them access to the financial markets infrastructure sandbox. This amendment also gave the FCA authority over stablecoins and other digital assets.
The passage of the FSM bill was just one step in making sure that Sunak’s vision becomes reality, but it does not end here—more steps have yet to be taken before we can see tangible results from this initiative, such as developing a regulatory framework around cryptocurrency trading or introducing tax incentives on investments related to cryptocurrencies, etc. These are all measures that will help foster innovation within this sector while protecting investors at the same time.
By taking these measures now, the UK is setting itself up to be an attractive destination when it comes to investing in crypto assets. With its competitive business environment, open market policies, and strong legal frameworks already in place, it makes perfect sense why so many tech companies are choosing London or any other city within the United Kingdom when they want to expand their operations globally.
We look forward to seeing how far the government takes its plans regarding cryptocurrency adoption and development over the next few months and years. It could potentially open doors to innovative opportunities across different sectors ranging from the finance industry to the education system, where blockchain technology can play a vital role in improving security and efficiency processes involved with student data management.
The UK government has recently reaffirmed its commitment to financial services reform with the release of The Edinburgh Reforms in December 2022. Under these reforms, specific digital asset work streams have been listed as part of the government’s plans for modernizing and strengthening the country’s financial sector.
Andrew Griffith, the UK’s Economic Secretary to the Treasury, spoke before a hearing of Parliament’s Treasury Committee about payments technology and CBDC earlier this year. During his speech, he expressed support for a stablecoin that would be issued by third-party providers rather than by the government itself. This is an important step towards mainstreaming cryptocurrencies in general, something that many experts believe could happen within the year 2023 if regulations are put into place soon enough.
Griffith also commented on an upcoming consultative paper regarding Central Bank Digital Currencies (CBDC), which will be released “in weeks, not months.” This document is expected to provide more information on how governments plan to regulate cryptocurrencies going forward, which investors have eagerly anticipated since crypto prices began rising last year!
Despite some uncertainty still surrounding cryptocurrency regulation, it seems clear that the Edinburgh Reforms are paving the way for innovation within Britain’s fintech industry over the next few years and beyond! With more clarity around CBDC coming soon, we can expect even greater investment into blockchain projects throughout Europe very shortly!