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The government of the U.K. has completed its review of comments received from the public regarding its proposed regulatory regime for crypto assets and has decided to move forward with implementing the first set of rules to regulate the crypto sector, including a requirement that all market participants be authorized before they can offer services to customers.
HM Treasury released the government’s responses to the comments received from the public on Monday, saying, “The government’s ambition to make the UK a global hub for cryptoasset technologies remains steadfast.”
“To realize this ambition, we must make the UK a place where cryptoasset firms have the clarity needed to invest and innovate, and where customers have the protections necessary for confidently using these technologies,” said Andrew Griffith, economic secretary to the Treasury.
“The learnings gathered from our engagement have been invaluable for further informing our approach,” he added. “While most aspects of our proposals were well received by the large majority of respondents, we have modified certain features of our future framework to take onboard the evidence presented.”
The Treasury said it would move ahead as proposed in a February public consultation, requiring firms undertaking cryptoasset activities to be authorized by the Financial Conduct Authority (FCA), although it gave no start date.
“By and large, the government intends to implement the territorial scope of the future regulatory regime as proposed in the Consultation,” they said. “This means a person (whether legal or natural) will generally be required to be authorized by the FCA under Part 4A of FSMA if they are undertaking one of the regulated activities or are providing a service in or to the UK.”
The rules that the Treasury intends to enforce focus on crypto assets like Bitcoin (BTC), the underlying blockchain technology that underpins the sector, and providers that are looking to offer crypto asset services to the U.K. public.
Regulated activities include offering a cryptoasset, operating a trading platform, swapping cryptoassets for currencies such as sterling, arranging investments and lending in cryptoassets, and safekeeping or custody.
“The government’s position is that firms dealing directly with UK retail consumers should be required to be authorized irrespective of where they are located,” they said.
The ministry said the new rules will be brought under established market law rather than exist as a standalone regime.
"It’s unlikely that crypto regulation will be easily shoe-horned into the existing regulatory framework," said Jonathan Cavill, a lawyer at Pinsent Masons. "The reality is that as the market develops at pace, the UK runs the risk of being left behind if it fails to attract crypto businesses."
The ministry said it plans to accelerate the implementation of these rules to provide the sector with greater clarity and will present secondary legislation to parliament in 2024. They also released a separate document outlining their approach to regulating stablecoins and will propose legislation in 2024 to give the FCA powers to oversee them.
The decision to move forward with establishing regulations around digital assets comes on the heels of the June passage of the Markets in Crypto Assets (MiCA) legislation in the European Union, which is the world’s first set of comprehensive rules specifically for cryptoasset markets.
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Spain to implement MiCA ahead of schedule
The Spanish Ministry of Economy and Digital Transformation has announced that it will begin implementing MiCA at the national level in December 2025, six months before the July 2026 general deadline for implementing the crypto framework for all 27 member states of the E.U.
The Ministry made the announcement via a press release on Thursday, and the first vice president of Spain, Nadia Calviño, has since met with the president of the European Securities and Market Authority, Verena Ross, to discuss the government’s intention to advance the implementation of MiCA.
While MiCA was approved in June, E.U. countries have been given a 36-month transition period from the time the bill was published in the Official Journal of the European Union. Spain previously stated they wanted to shorten that transition period to 18 months.
"The government will shorten the transitional period of application ... with the aim of creating a predictable and stable regulatory and supervisory framework," the release from the Ministry said. “[This] will provide legal certainty and greater protection for Spanish investors in this type of assets.”
But they are not waiting until 2025 to start their preparations, as multiple large international crypto exchanges in Spain have been granted local licenses. In June, Crypto.com announced that they had been granted a Virtual Asset Service Provider (VASP) registration from the Banco de España that allows the exchange to operate in the country.
In September, Coinbase secured an anti-money laundering compliance registration from Spain’s central bank, and Kraken attained a VASP registration similar to Crypto.com.
Earlier this month, Banco de España issued a note to Spanish citizens preparing them for the potential introduction of a digital euro and explaining the basics of how the European Union’s central bank digital currency (CBDC) would operate.
“These preparations are multiple and complex in nature, not only for the Eurosystem but also for legislators,” they said. “The objective is clear: to be able to complement the range of payment solutions available to citizens, including cash. The digital euro would be an additional option that would ensure access to public money with all its guarantees, also in an increasingly digital environment.”
“The infrastructure that allows us to make electronic payments (machines, connections, protocols ...) is a key part of our financial system and the Eurosystem ensures its soundness and availability,” the central bank said. “The digital euro would be based on a public and European infrastructure that would strengthen the European financial system and make it more independent of foreign alternatives.”
By
Jordan Finneseth
For Kitco News
