UK’s Crypto Regulation Tightens: What You Need to Know

The Landscape of Crypto Regulation in the UK

Under the new Prime Minister, Rishi Sunak, the Conservative Party has made vocal gestures toward embracing cryptocurrencies. However, as they say, talk is cheap—especially when it comes to crypto regulation in Britain. The upcoming watchdog measures are poised to enforce stricter control over the ever-evolving cryptocurrency market.

What Sparked the Shift?

One major influence on this regulatory pivot has been the infamous collapse of the FTX exchange. Ah yes, FTX—a name synonymous with ‘what not to do’ in the crypto world. Now, it seems the British financial regulators are scrambling to tighten the leash on the industry. Rumor has it that the Treasury is putting together a robust set of guidelines, which might make some crypto folks a bit nervous.

Expanded Powers for the FCA

The proposed legislation is expected to expand the authority of the Financial Conduct Authority (FCA), allowing it to oversee crypto companies’ operations and advertisements within the UK. This means if your meme coin prediction starts to result in a promotion-stunt-level ad, it might not fly under the new rules.

What About Foreign Companies?

Now, let’s talk about the potential kryptonite for foreign crypto entities. The guidelines may introduce restrictions that would effectively limit how foreign firms can operate within the UK market. This could involve making it a lot harder for companies outside the UK to sell their crypto directly to British investors. You know what they say: No pain, no gain!

Registration Woes with the FCA

But hold onto your blockchain hats—registration with the FCA is no walk in the park. Reports suggest that a staggering 85% of applicants failed the FCA’s Anti-Money Laundering (AML) tests. So, if you thought applying for a library card was tough, try getting past the FCA!

A New Consultation Period Ahead

While the consultation process initially launched in 2021, it looks like the fast-paced crypto world might push the timeline into 2023. In the meantime, a hearing on December 7 will dive into the risks associated with crypto and the feasibility of a Central Bank Digital Currency (CBDC). Yes, you heard it right—another acronym to add to your fintech vocabulary.

But don’t forget about the curious case of NFTs and their potential impacts on the UK economy. The Digital, Culture, Media and Sport Committee is already knee-deep in investigations, gathering public input on the ups and downs of non-fungible tokens.