The UK government has unveiled draft legislation to regulate the cryptocurrency market, aiming to enhance financial stability and support economic growth. The proposed rules will provide a framework for cryptoasset trading exchanges and stablecoin issuance, while also addressing market abuse and admissions.
The UK Government Targets Exchanges and Stablecoins With New Draft Crypto Rules
Regulatory Environment for Cryptoasset Trading Exchanges and Stablecoin Issuance
The U.K. government released consultation papers on draft legislation for the crypto industry that will provide a regulatory environment for activities such as cryptoasset trading exchanges and stablecoin issuance, as well as covering market abuse, admissions, and disclosures regimes.
Cryptocurrency regulations vary across countries, with some having strict laws and others more lenient.
In the United States, the Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities or commodities.
The European Union's Fifth Anti-Money Laundering Directive requires cryptocurrency exchanges to implement anti-money laundering measures.
China has banned initial coin offerings (ICOs) and restricts cryptocurrency trading.
Japan regulates cryptocurrency through its Payment Services Act.
Building on Existing Legislation
The proposed rules build on the Financial Services and Markets Act that passed into law in 2023 and gave the Treasury power to create new rules for the crypto sector. The U.K. is lagging behind the European Union, whose industry-specific ‘Markets in Crypto Assets (MiCA)’ legislation kicked in last year.
Supporting Economic Growth
Finance Minister Rachel Reeves stated that the new rules are about supporting the country’s economic growth objective and making ‘the U.K. a great place for digital asset companies to invest and innovate.‘ The legislation is planned for this year and aims to facilitate responsible growth of digital assets, both in the U.K. and globally.
Rachel Reeves is a British Labour Party politician who has served as the Member of Parliament (MP) for Leeds West since 2005.
She was appointed as the Shadow Chancellor of the Duchy of Lancaster in 2020, where she led the opposition's economic policy team.
Reeves has also held various other roles within the Labour Party, including serving as a shadow cabinet member and chairing the Business, Energy and Industrial Strategy Committee.
Born in 1979, Reeves studied at Oxford University before entering politics.
International Cooperation
Reeves also emphasized the U.K.’s intention to work with the U.S. to ‘support the use and responsible growth of digital assets.‘ This cooperation reflects the growing recognition of the importance of international coordination in regulating the crypto sector.
The UK and US have been actively collaborating on cryptocurrency regulation, with both countries recognizing the need for a unified approach to address emerging issues.
In 2020, the two nations signed a joint statement on digital assets, highlighting their commitment to cooperation.
The statement emphasized the importance of regulatory clarity and consumer protection in the rapidly evolving 'crypto market'.
This collaboration has led to increased transparency and consistency in cryptocurrency regulation, benefiting both countries' economies and investors.
Technical Comments and Next Steps
The Treasury is open to receive technical comments on these draft rules by May 25, and it intends to publish rules for the market abuse, admissions, and disclosures regimes in due course. The consultation papers can be found on the government website.
