The United Kingdom is preparing to enact fresh legislation regarding cryptocurrencies and stablecoins by June or July 2024, as indicated by Economic Secretary Bim Afolami. Afolami, speaking at the Innovate Finance Global Summit, mentioned that the government is swiftly working on finalizing the proposals for the crypto regulatory framework.

Afolami emphasized the urgency of the situation by stating, “We are currently expediting the process to implement the legislation that will establish the framework for our proposed regime,” during his address at the Innovate Finance Global Summit.

This development follows the enactment of the Financial Services and Markets Act in June 2023, which facilitated the regulation of cryptocurrencies as financial activities.

Upon implementation, various crypto asset operations, including exchange management and customer asset custody, will fall under regulatory oversight for the first time, according to the Economic Secretary.

The government aims to position the UK as a premier destination for the crypto sector and intends to subject pertinent activities to the oversight of the Financial Conduct Authority (FCA). Concurrently, recent regulations concerning the advertising of digital assets have been enforced in the country.

Duncan Ash, the Head of Strategy at Coincover, highlighted in an op-ed for Finance Magnates, “While the specifics of the new regulations and their enforcement are yet to be revealed, it is certain that the future landscape of crypto will be characterized by heightened regulation and supervision.”

Shifting Regulatory Landscape

The upcoming regulations will encompass a broad spectrum of crypto asset functions within the regulatory framework for the first time, including exchange operations, custodial services, and related activities. The FCA will initiate consultations on an authorization system for crypto enterprises, with plans to establish equivalence standards for foreign entities.

The UK government has adopted a phased strategy for introducing crypto regulations, with a primary focus on legislation for fiat-backed stablecoins. Subsequent areas like algorithmic stablecoins will be addressed as the government integrates activities such as lending and trading into traditional financial regulatory structures.

Despite the government’s endeavors to foster a crypto-friendly environment, the UK crypto industry has encountered obstacles. Complaints from crypto firms regarding delays and inadequate feedback from the FCA have emerged, and the recent enforcement of rules restricting crypto promotions has prompted some prominent firms to cease operations in the UK. Notably, the market watchdog issued over 450 alerts regarding illicit crypto advertisements in a span of three months, as of February 2024.

In parallel developments, Poland is also gearing up to regulate cryptocurrencies this year. Under the impending laws, the local financial supervisory authority, KNF, will possess the authority to freeze the cryptocurrencies of companies and users for up to 96 hours based on suspicions of unregulated trading.