With cryptocurrencies being recognized as a regulated financial instrument in the UK by lawmakers in the House of Commons, the lower chamber of the British parliament, there are increased hopes of the country becoming a crypto hub.
The move in the UK has already caused a surge in the price of crypto assets.
This move has been taken at a time when the UK economy, as well as politics, is going through a turbulent period with Conservative Party leader Rishi Sunak being selected by the party as the candidate to replace outgoing Prime Minister Liz Truss, just 45 days into her tenure at the top office of the country.
The bill that the lawmakers voted on was initially introduced by Sunak when he served as the Chancellor of the Exchequer in the cabinet of former Prime Minister Boris Johnson. The bill is called the Financial Services and Markets Bill.
During the discussions on the bill, lawmakers debated on the further expansion of the scope of regulated financial services so that crypto is brought under the purview.
During the parliamentary session, Conservative MP Andrew Griffith submitted an amendment to expand the scope of regulated financial services to cover crypto. Griffith has served as the UK’s Financial Secretary to the Treasury and City Minister since September 2022.
“New clause 14 clarifies that cryptoassets could be brought within the scope of the existing provisions of the Financial Services and Markets Act 2000 relating to the regulated activities order. The substance is that cryptoassets will be treated like other forms of financial asset: not preferred, but brought within the scope of regulation for the first time. That is the aim of the new clause,” said Andrew Griffith, UK’s Financial Secretary to the Treasury and City Minister since September 2022.
The lawmakers also discussed that by broadening the regulation, the Treasury would be able to react to developments in the crypto sector faster and deliver regulation in an elegant, risk-based manner in a way that is consistent with the approach of the new government to the broader financial services sector.
However, the lawmakers also reiterated that their intention is not to treat cryptocurrencies and other crypto assets as any other form of financial asset and not provide them with any special treatment, therefore bringing this asset class within the scope of regulation.
The bill also includes steps to bring stablecoins within the existing regulations.
The success of the potential of the UK recognizing crypto assets as any other financial asset or instrument for regulation – which is a move that takes the UK a step closer to becoming a crypto hub, is being touted by experts.
This optimism is further enhanced by the support for the issue led by the opposition parties in the UK. For example, representatives of the opposition Labour Party said that the bill’s provisions regarding crypto were an “important move that will help to prevent high-risk crypto assets from being falsely advertised to the public.”
However, the bill becoming a law still requires it to pass through two more stages in the lower chamber. Then the bill will be put before the House of Lords, the upper chamber of the UK parliament. In the final stage, the bill has to be signed by King Charles to become law.
Despite this long process, the optimism in the crypto sector, not only in the UK but in international markets, has been boosted, resulting in a surge in the price of various cryptocurrencies since the move. This is also being viewed as a welcome move in the current bear situation that the global crypto market is currently going through.