Author: Nicola Sharp 28 June 2023
The House of Lords has passed the Bill that will see cryptoassets recognised as regulated activity. Nicola Sharp of Rahman Ravelli considers its main features.
The House of Lords passing the Financial Services and Markets Bill can be viewed as a significant step forward in the UK’s attempt to regulate cryptoassets and related service providers.
Introduced in July last year in an effort to both boost opportunities in the wake of Brexit and empower financial regulators, the Bill originally contained a provision for regulating stablecoins under national payment rules. But as the Bill progressed through Parliament, the adoption of various amendments led to it containing measures to treat all cryptocurrencies as regulated activities, along with provisions for overseeing crypto promotions.
The Bill, which was introduced as a result of the government’s Future Regulatory Framework review, has the potential to create substantial change in the financial services sector. This includes the repealing and replacement of all laws and regulatory requirements stemming from European Union measures, as a result of Brexit.
Arguably, the Bill’s most striking feature is its provision for regulating cryptoassets and their providers. Introducing supervision into a sector that has been largely known for its low-regulation activities may bring a degree of clarity and stability to cryptocurrency markets, which have often been volatile.
The Bill also sets out to regulate ‘Buy Now Pay Later’ products and their providers, in order to provide better consumer protection. It also includes measures to guarantee continued access to cash - which remains important for sections of society – and introduce the possibility of mandatory reimbursement for victims of Authorised Push Payment (APP) scams. With APP scams having been an increasing problem, the Bill proposes tighter controls on those who approve financial promotions for others, in an attempt to ensure greater accountability.
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