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On April 15, 2024, at the Innovative Finance Global Summit, UK Economic Secretary Bim Afolami announced plans to introduce new laws to regulate the issuance and use of stablecoins and cryptocurrencies in the UK. This comprehensive regulatory framework is expected to be released by July 2024 and will position the UK as a leader in regulating the burgeoning cryptocurrency industry.
The UK’s cryptocurrency industry is one of the fastest-growing cryptocurrency markets globally, surpassing Germany and the US after experiencing aggressive growth over the past decade. The popularity of cryptocurrencies in the country and their viability as legal assets has put an end to the country’s ammas. 3 million cryptocurrency users. These users are estimated to hold a total of over $3.72 billion in cryptocurrency assets. Additionally, the UK cryptocurrency industry will generate approximately $1.9 billion in revenue in 2023. Expected to reach $2.53 billion in 2024.
As mainstream businesses in the UK increasingly adopt digital currencies, this exponential growth and market penetration has sparked the need for industry regulation.
What to Expect from New Cryptocurrency Laws
Today, cryptocurrencies have impacted numerous industries, from becoming the latest currency to facilitate transactions in online banking to operations. casino demo In online games. Naturally, the UK aims to create a vibrant and safe cryptocurrency environment in the UK by establishing clear operating rules in the cryptocurrency world.
at Innovative Finance Global Summit, Bim Apolami said a final proposal to the regime was being prepared so that the bill could be delivered soon. He added that a number of cryptocurrency asset activities will come under regulatory scope for the first time. Some of the expected regulations in cryptocurrency regulation include:
● Enacts licensing requirements for stablecoin issuers to alleviate concerns about the potential financial instability of stablecoins, which are cryptocurrencies whose value is pegged to traditional assets or other cryptocurrencies.
● It provides clarity on the tax implications of staking as cryptocurrency owners secure their assets, facilitating transaction verification on blockchain networks and ensuring consumer protection.
● To prevent criminal activity within the cryptocurrency environment, the sale and purchase of digital assets on cryptocurrency exchange platforms will be subject to greater scrutiny. These platforms will probably be subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, just like traditional financial systems.
● To protect users’ assets from cyberattacks and other threats, resilient security measures are needed for custody service providers who store cryptocurrencies for users for a fee.
The UK economy secretary confirmed that the UK’s aim is to attract businesses and investors to this fast-growing sector, while protecting UK consumers from financial risk and fraudulent activity.
UK’s Cryptocurrency Ecosystem Legislative Journey
According to UK Financial Conduct AuthorityIn 2019, only 42% of UK adults had heard of cryptocurrency. However, by 2022, 91% of UK adults knew about cryptocurrency. Additionally, the UK government has expressed interest in regulating the cryptocurrency industry in 2022.
● Early 2022 – British Chancellor Rishi Sunak revealed his government’s plans to ensure that the UK’s financial system supports cryptocurrency institutions as it seeks to transform the UK into a leading financial centre. He said he would focus on championing the operation, investment, innovation and scalability of cryptocurrencies and businesses.
● February 2023 – In line with the government’s plan to make the UK a global financial centre, the UK’s Financial Conduct Authority (FCA), in collaboration with the Bank of England (BoE), begins consultations on developing a regulatory framework for stablecoins. The consultation took place in line with the FCA’s guidance that it is responsible for regulating the country’s cryptocurrency environment. At the same time, the BoE will be tasked with overseeing the operations of stablecoin providers whose market size and influence could impact the UK financial system.
● July 2023 – The UK’s Law Commission overhauled domestic cryptocurrency law, introducing four key recommendations that would ensure the country recognizes cryptocurrencies and stablecoins as regulated financial activities.
Twelve months after a historic move by the UK Law Commission, the final regulatory framework for cryptocurrency companies and cryptocurrencies is expected to be revealed. However, this may not be guaranteed due to the general election, which is likely to be held in the second half of 2024.
Labor is currently expected to win the election and has already expressed uncertainty about cryptocurrency regulation. If Labor takes control of the ruling Conservative Party, approval of regulations or amendments may be delayed. If this happens, the UK cryptocurrency industry could suffer the same fate as the US cryptocurrency market. The U.S. cryptocurrency market is losing cryptocurrency users to other jurisdictions due to regulatory uncertainty in that country.
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