The UK’s first proposed crypto asset bill was proposed in front of Parliament last Wednesday and will be further debated in the coming days.
The 335-page UK Market bill contains existing rules for banking and financial institutions and will be modified to address how digital assets will be implemented. A goal of the proposed bill is to bolster the country’s financial wealthfare post-Brexit.
Cryptocurrencies are defined as ‘digital settlement assets (DSAs) – a digital representation of value or rights’. Stablecoins are of particular interest within the legislation as wheels in motion were put in place last April to regulate the crypto asset with a formal announcement during the Queen’s Speech by the UK Treasury.
“Legislation to regulate stablecoins, where used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech,” said a Treasury spokesman during the Queen’s Speech.
“This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely.”
The UK Treasury outlines DSAs to be used as digital assets for payments that are not ‘cryptographically secured’, a process via a pseudorandom number generator that determines if a cryptocurrency is secured.
Plans for the extension of cryptocurrency regulation within the UK Market bill were accelerated over the past several months, this despite one of its biggest proponents, ex-Chancellor Rishi Sunak’s resignation from Boris Johnson government two weeks ago.
Sunak, now running for Conservative leadership to become the country’s next Prime Minister, backed plans for stablecoin regulation to “ensure the UK financial services industry is always at the forefront of technology and innovation”.
The new DSA regulations will act under Schedule 6 under the legislation, alongside proposed plans to amend the UK Banking Act 2009. The DSA service providers portion of the bill will “set rules, standards, or conditions of access or participation in relation to the payment system”.
Although retaining powers to modify regulations if deemed appropriate, the UK treasury must first, however, seek consultation from the Financial Conduct Authority (FCA), the Bank of England and other payment regulatory bodies before regulations can be put in place.
The bill is expected to be run through its first round of debates in Parliament today after its presentation on Wednesday.