UK passes extensive legislation to create a cryptocurrency hub and control the cryptocurrency market
- Written by Cryptologic
A fresh piece of financial law intended to regulate the cryptocurrency market has been put into effect in the United Kingdom. This comprehensive law has certain clauses that are tailored to the creation of a specialised "Crypto Hub."
The Financial Services and Markets Bill, a new piece of law that will govern cryptocurrencies and stablecoins, has officially been enacted in the United Kingdom. The purpose of this law is to enable authorities to create a tailored framework for the UK's digital asset market in order to facilitate the secure adoption of cryptocurrencies.
The UK government's goal of making the nation a well-known worldwide crypto centre is in line with the passing of this measure. The government's choice to regulate cryptoassets is in line with its goal of educating companies and consumers on how to use cryptocurrency. Influential Members of Parliament initially disagreed on whether to regulate cryptocurrencies as gambling or in a way that was compatible with traditional finance, but the decision to regulate them as a part of larger financial regulatory changes ultimately won out. The new law paves the way for the UK to acknowledge and accept comparable rules from other nations, enabling permitted companies from other countries to service clients in the UK without having to have a physical presence there.
The UK's regulatory stance towards cryptoassets has taken a huge stride forwards with this announcement, which is likely to have a major effect on the industry.
Recent law in the UK establishes regulatory "sandboxes" to encourage company experimentation with blockchain technology. Stablecoins, which are virtual tokens anchored to fiat money, are also recognised as a means of payment by this new regulation. The UK Economic Secretary to the Treasury, Andrew Griffith, has hailed the legislation as a landmark piece of legislation and emphasised that it returns national government control over the financial services rulebook and is anticipated to unlock investment, foster innovation, and spur economic growth.
Regulatory sandboxes are a tool for advancing financial inclusion, competitiveness, and innovation. The idea of a regulatory sandbox, which was developed in the UK in 2016, soon caught on in many other nations as a means of promoting breakthroughs in financial technology (fintech). The sandboxes provide businesses a regulated setting where they may test their novel ideas on actual customers while obtaining regulatory assistance and direction.
It is still up for dispute whether regulatory sandboxes are successful in achieving policy objectives and justifying differentiated regulatory treatment. However, empirical data from the regulatory sandboxes in the UK and Singapore between 2016 and 2018 suggests that they may have advantages, such as fostering partnerships, facilitating market entry for businesses, enhancing competition, enhancing innovation, bolstering regulatory institution capacity, and providing a foundation for regulation. To develop and execute regulatory sandboxes, there are obstacles to overcome and factors to take into account, such as resolving regulatory harmonisation between nations, guaranteeing transparency and a level playing field, and evaluating the effect on financial inclusion.
Overall, the UK government's decision to implement regulatory sandboxes shows its dedication to promoting innovation, advancing fintech, and regaining control over financial services regulation. These "sandboxes" give companies a safe setting to test out blockchain technology and other cutting-edge ideas in order to spur economic growth and enhance the financial system.
