The horrific events of 2022, which wiped out several organizations, have left governments around the world in dire need of effective regulation of cryptocurrencies. The U.K. has spearheaded what analysts call one of the most robust systems for regulating cryptocurrencies.
The currently published proposals to regulate crypto-assets go hand in hand with the U.K.’s ultimate crypto-goal. Last year, Rishi Sunak, the current British prime minister, said he would use his post to establish the kingdom as a global hub for crypto-assets.
The Treasury notes that this will give cryptocurrencies a chance to take advantage of the trust, credibility, and regulatory clarity of the current system for financial systems established by the U.K. Financial Services and Markets Act 2000 (FSMA).
According to reports, the United Kingdom’s financial regulators intend to level the playing field for both centralized and decentralized financial markets. Furthermore, the regulation provides conventional and emerging financial markets with the same risk and regulatory outcome.
Regulators have admitted that the measures may not benefit everyone. This is true, for example, when some crypto corporations choose to continue operating outside of the United Kingdom.
Financial regulators in the United Kingdom seek to prevent a repetition of the 2022 crypto market. The Treasury is concerned with protecting investors and keeping centralized crypto firms responsible. In contrast to traditional financial companies, the FCA will not require decentralized financial entities to report market data regularly.
Exchanges should store operational data and make it available to regulators at all times. Unlike other countries attempting to regulate cryptocurrency, the Treasury Department has decided not to prohibit algorithmic stablecoins.
However, financial regulators in the United Kingdom will not designate these currencies as stablecoins. They will instead classify them as unbanked digital assets. Nonetheless, the crypto winter has highlighted the importance of global crypto rules, and Britain is ready to help.
E.U. crypto-asset market legislation (MiCA) is reportedly moving toward legislation. The new cryptocurrency regulations will become law for all 27 E.U. member states. As such, local cryptocurrency companies are preparing for the changes.
According to the legislation, cryptocurrency organizations must inform the public about the real-time pricing of their tokens and trading volumes. In addition, these organizations must settle all transactions on the same day they occur.
In addition, crypto exchanges must segregate their funds, including cryptocurrency, from those belonging to their customers. The ruling also explicitly prohibits insider trading. Moreover, once the E.U. adopts MiCA, cryptocurrency organizations will have 18 months to adapt.
Meanwhile, some companies have set up operating bases in the United Kingdom. According to recent reports, Crypto.com has received approval from the U.K. Financial Conduct Authority and registered as a crypto-asset service provider in the United Kingdom.
In addition, after a long wait, the cryptocurrency trading app Revolut received FCA registration to provide crypto services in the U.K.
In addition, in August 2022, Revolut was granted the right to provide its services throughout the European Economic Area. The win resulted from registration with the Cyprus Securities and Exchange Commission.