No new regulation on crypto laws until 2024
The UK will not introduce fresh laws on regulating the cryptocurrency industry until at least 2024, according to City minister, Andrew Griffith. Recent turbulence in the sector, including the collapse of crypto exchange FTX in November, has led to calls for regulation to come faster.
On regulation, Ripple Labs’ (a leading provider of crypto solutions for businesses) head of Europe, said recently what really matters is having a clear regulatory framework so that all the players know the rules of the road and can innovate accordingly and uncertainty is the biggest threat to innovation.
Griffith told MPS on 10 January that while he would meet with crypto firms this year, the government is “not going to be legislating in 2023” beyond previously announced rules.
This latest move risks the UK falling further behind in rolling out rules targeting the nascent sector. The European Union has steamed ahead, agreeing the wide-ranging Markets in Crypto Assets regulation, which is set to come into force this year.
However, the UK is still drawing up its own regime. The government’s Financial Services and Markets Bill includes some laws relating to crypto, including giving the Financial Conduct Authority more powers to regulate the sector and making it harder for crypto firms to advertise.
The government is set to release a consultation on regulating the crypto industry, as well as stablecoins, in the coming “week, not months”, Griffith said.
Scottish National Party MP Alison Thewliss said: “In the absence of any actual legislation or regulation on this, you still have the prospect of people in the UK putting money into things like FTX and being absolutely unprotected.” Griffith defended the strategy of consulting over the course of 2023.
He said it was “with a view of getting the regulation right. (Crypto) is an immature market.
It is very broad.” “We’re talking about use on one level by central banks, by wholesale operators who operate purely in the wholesale market, and at the other end extreme consumers and either their use cases and their desire to speculate on a new emerging technology.”
However, Griffith did hint at the scope of future regulation, saying the European Union’s MICA covers “some but not all of the areas that we would aspire to cover” such as decentralised finance.
“We have the opportunity to potentially be a bit more agile in how we tackle some of those same underlying purposes.” UK crypto regulation will “try and mirror the previous regime” in broader financial regulation, he added.
“If something is a means of payment then we look to regulate it as a payment. If something is a speculative investment then it would fall into that particular bucket.”
He said it would also include “things like having transparency regimes, reporting, protection against market abuse and a selfdealing and proper trust-based custody. Those are all things that one would aspire to for example on a crypto exchange that are already mirrored on exchanges for other assets.”
In April, the then-chancellor Rishi Sunak said he wanted the UK to be a global crypto hub. Asked whether the government was still committed to the plan, Griffith said: “Our objective is to seek for the UK to be the home for a well-regulated technologically advanced financial system and there is absolutely room for this technology within that.”
He added: “Clearly, recent events since April 2022 have highlighted vulnerability.” However, he maintained that it would be “wrong for the UK not to be forward-leaning in seeking to make the most of the opportunity” of blockchain technology, pointing to potential applications within the existing financial system such as tokenising assets and central bank digital currencies.