The United Kingdom Treasury published draft digital asset regulation and indicated that it is planning to work with the United States to support innovation in the digital asset industry, said Chancellor Rachel Reeves on April 29.
“Through our change of change, we make Britain the best place in the world to renew – and the safest place for consumers,” Reeves said in April 29 statement. “Robust rules on crypto will increase investors’ trust, support the growth of fintech and protect people across the UK.”
Britain’s tax chamber’s comments came after Reeves recently met with US Finance Minister Secretary Scott Bessent In Washington, DC, where, according to reports, the cooperation discussed on regulation of digital assets.
The chancellor also said that the UK and the United States will use their upcoming joint “financial regulatory work group” to “continue commitment to support the use and responsible growth of digital assets.”
The British government’s plans to adapt to digital asset policy were revealed at a major summit in London to highlight UK Fintech Week, where Reeves also announced that the Treasury had Published Draft legislation to regulate the industry.
According to the new drafts of rules, digital exchange exchanges, retailers and agents would be conducted under the UK’s regulatory regulation of financial services and digital asset companies with British customers would have to meet clear standards for openness, consumer protection and operational resilience – “just like companies in traditional financing,” Treasury said.
The most likely, “Today’s announcement sends a clear signal: Britain is open to companies – but closed to fraud, abuse and instability.”
So far the UK has taken a more cautious wait-and-see strategy for Digital asset controlIntroduction of bite rules for the sector, including those related to financial campaigns, banking and property laws.
In the global regulatory spectrum, from the US free or depending on who you ask, regulating Kvagmire-to the extensive of European Union, tailor-made Markets in Crypto Assets (Mica) Regulatory FrameworkBritain has tended to turn closer to the former.
The new proposal for regulations, which was announced on Tuesday, would define digital assets and extend existing financial regulation to companies involved in them and further adapt the UK with the US strategy over the EU.
Stablecoins Has been at the peak of many regulatory agenda in recent months, especially in the United States, with several new legislative proposals that are currently going through Congress and hopes that the legislation will be adopted within the next few months.
The highlight of the British Finance Ministry’s draft rules for Stablecoins was that issuers would be subject to regulation only if they are based in the country.
The government said it was aimed at completing the new legislation at the end of the year and that the rules would build on the first Treasury described in a February 2023 Consultation on the future regulatory regime for cryptoassettes.
Britain’s current regulatory landscape
In June 2023, the British Parliament passed Financial Services and Markets ACT (FSMA) 2023Which enabled Stabelcoins and digital assets for the first time that regulated activities in the country.
While this lays the foundation for creating a regulatory framework, it does not constitute a complete regulatory system in itself. However, it came with a couple of significant changes for Digital asset sector in the UK.
First, the FSMA 2023 expanded the banking rules for the previous FSMA title – for example, maintaining sufficient capital to withstand financial shocks, implementing robust risk management practice and providing clear and transparent information to customers – to stable and digital assets.
Second, and perhaps more important, updated FSMA “Financial Promotions Regime” – designed to control how companies operate in the UK can Advertise and the market their products – to include digital asset activity.
Economic campaigns
Especially below The new regimeAny marketing of digital asset products or services in the future needed to attach a “clear warning”, and companies that market digital assets to UK consumers must introduce a 24-hour cooling period for the first time investors.
It also set up only four legal routes that companies could take to communicate digital asset campaigns in the UK, namely: The campaign could be communicated by an “authorized person”, as Defined by Financial Conduct Authority (FCA); An unauthorized person could communicate a promotion that had been approved by an authorized person; The campaign can be communicated by a digital asset company registered with FCA under Money laundering, financing of terrorism and transfer of funds regulations in 2017 (MLR); Or the campaign can be communicated if the fulfilled conditions for an exception in the economic marketing order.
Campaigns that do not use one of these legal routes would be considered in violation of the new rules and thus “a crime that can be punished with up to 2 years in prison, an unlimited fine or both.”
Those who got ugly of the rules were also added to one Warning listwhich contains companies and individuals such as FCA has identified as potential activities without its permission and supervision or that it has concern for other reasons.
UK announced The new rules for digital assets in June 2023, which came into force on October 8 of the same year. During the first year of the financial marketing regime, FCA took down Over 900 “Crypto-related SCAM sites” and issued 17,000 customer alerts.
The financial campaign regime was the most influential change that came with the passage of FSMA, and it was not to meet with universal approval From some sectors in the industry, some of which looked at the process of becoming an “authorized person” or to approve your marketing, as a difficult obstacle to entry – and consequently a company that cannot promote its operations has a natural competitive disadvantage.
The second significant development in Britain’s digital asset law came in September last year when the House of Commons – the Lower Chamber of Britain’s parliament – induced a bill that allows digital assets to be regarded as property under the law.
Digital assets as property
In July 2024, the British Law Commission – a statutory independent body that holds the Act on England and Wales, published under review and recommends reform – a supplementary “final report” that illustrates the lack of the current categorization of personal property to report digital assets, and in August this followed up with an upward report Report advocates for legal reforms to deal with it.
The problem, as the Law Commission saw it, was that the laws in England and Wales have only two categories of personal property: “Things in possession”, ie. concrete property; and “things in action”, ie intangible property as liabilities or rights.
This puts digital assets in any gray area, as they can have both properties or neither, resulting in confusion and obstructive resolution in court procedures.
The Law Commission proposed to introduce a “third category” to ensure that ownership related to digital assets are clear and enforceable. To achieve this it recommended a ‘Real estate bill“It would clarify that” one thing (including a thing that is digital or electronic in nature) is not prevented from being the subject of personal ownership just because it is neither – (a) a thing in possession nor (b) one thing in action. “
This bill would make it possible to be regarded as property, whether they fit into one of the two existing categories, but would submit it to “joint law development”, the courts – to develop the third category for digital assets.
In September the British government is took up the recommendationintroduces one invoice To create a new category of personal property for digital assets and non-fungal tokens (NFT).
The so-called “property (digital assets, etc.) is now sitting in the House of Lords-The Upper Chamber of the British Parliament-When possible changes is discussed, but with the support of the House of Commons and Law Commission, it will almost be assumed by law.
Watch: Reggie Middleton at Defi, Booms/Busts & Crypto Regulation
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