Minister Reveals When the UK Will Introduce New Cryptocurrency Regulation

The UnitedKingdom is gearing up to introduce new legislation for cryptocurrencies andstablecoins by June or July 2024, according to the Economic Secretary, Bim Afolami.Speaking at the Innovate Finance Global Summit on Monday, Afolami stated thatthe government is working swiftly to deliver the legislation that will put thefinal proposals for the crypto regulatory regime in place.

UK Set to Introduce NewCrypto and Stablecoin Regulations by Mid-2024

"Weare now working at pace to deliver the legislation to put our final proposalsfor our regime in place," Afolami said during the Innovate Finance GlobalSummit.

Theannouncement comes after the UK passed the FinancialServices and Markets Act in June 2023, which enabled cryptocurrencies to betreated as regulated financial activities.

Once itgoes live, a whole host of crypto asset activities, including operating anexchange, taking custody of customers assets and other things, will comewithin the regulatory perimeter for the first time, the Economic Secretaryadded.

JUST IN: UK plans to unveil new crypto and stablecoin regulations by July, announces government minister. #UK #CryptoRegulation

Thegovernment has expressed its intention to make the UK a preferred destinationfor the crypto industry and plans to bring relevant activities under thepurview of the Financial Conduct Authority (FCA). In the meantime, newregulations concerning the promotion of digital assets have comeinto effect in the country.

While itremains to be seen exactly what new regulation may look like and how it will beenforced, its inevitable that the future of crypto lies within far moreregulated and supervised parameters, Duncan Ash, the Head of Strategy at blockchainprotection firm Coincover commentedin an op-ed article for Finance Magnates.

Regulatory Winds of Change

Under thenew regulations, a wide range of crypto asset activities will fall within the regulatory perimeter for the first time, including operating an exchange, custodial services, and other related activities. The FCA will soon consult on anauthorization regime for crypto companies, and the government also plans toformulate equivalence measures for overseas firms.

The UKgovernment has taken a phased approach to introducing crypto regulations, withlegislation for fiat-backed stablecoins being the first priority. Other areas,such as algorithmic stablecoins, will follow as the government bringsactivities like lending and trading into the fold of conventional financialregulation.

Despite thegovernment's efforts to create a crypto-friendly environment, the UK industry has faced some challenges. Crypto firms have complained about delays andpoor feedback from the FCA, and recently introduced rules restricting cryptopromotions have led some well-known firms to cut UK services altogether. Accordingto data from February 2024, the market watchdog issuedover 450 alerts on illegal crypto ads in just three months.

In Europe, Polandis additionally preparing to regulate cryptocurrencies later this year. Under new laws,the local financial supervisory authority, KNF, will be allowed to block thecryptocurrencies of companies and users for 96 hours in cases of mere suspicionof unregulated trading.

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UK Adopts Crypto and Stablecoins as Regulated Financial Activity

A bill that aims to regulate cryptocurrencies and stablecoins in the UK has been approved by King Charles. Dubbed the Financial Services and Markets Act 2023, the new law classifies the trading of cryptocurrencies as a regulated activity and brings stablecoins under the scope of payment rules.

The Financial Services and Markets Act 2023 gives regulators more power to govern financial systems, including the digital assets. The bill, which got the approval of the upper house last week, permits the regulators, including the Financial Conduct Authority (FCA), the Bank of England, and the Payments Systems Regulator, to introduce new rules in the digital asset sector.

Unlocking Innovation

Andrew Griffith, the Economic Secretary to the Treasury, said that the new law presents an opportunity to tailor the regulations of financial services to the UK market since the country left the EU. Additionally, it is expected to enhance the scrutiny and the accountability of the regulators.

"This landmark piece of legislation gives us control of our financial services rulebook. It supports the UK businesses and the consumers, and drives growth," Griffith said. "By repealing old EU laws set in Brussels, it will unlock billions in investment cash that can unlock innovation and grow the economy."

Through the new legislation, the UK expects to promote the safe adoption of cryptocurrencies in the country. Additionally, it will create a framework to facilitate the testing of new technologies like the blockchain technology in the financial markets, the HM Treasury said in the statement.

The UK Curbs Crypto Promotions

The original version of the comprehensive bill was introduced in July last year and proposed to regulate stablecoins under the payments services rules. However, as the bill progressed through parliament, the amendment to treat crypto trading as a regulated activity was introduced. Additionally, the measures to control the promotion of digital assets were later included.

Griffith said in an interview with CNBC in April that the specific rules for cryptocurrencies could be introduced within a year. According to Griffith, the step is part of an agenda to establish the UK as a global hub for the cryptocurrency technology.

Meanwhile, Finance Magnates reported that the EU passed the Markets in Crypto-Assets (MICA) regulation in May, making Europe the first jurisdiction to introduce comprehensive laws on digital assets. MiCA aims to protect European investors, promote environmental sustainability, and prevent money laundering in the cryptocurrency sector.

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Revolut and MetaMask Forge Alliance to Introduce Revolut Ramp

Revolut, the digital banking platform, has unveiled astrategic collaboration with MetaMask, the self-custodial wallet, to introducea feature known as Revolut Ramp. This offering allows users to replenish theirMetaMask wallets directly from their Revolut accounts.

Visa and Mastercard Flexibility for CryptoTransactions

The integration aims to simplify the process of addingcryptocurrencies to self-custodial wallets, catering to users in the UnitedKingdom and the European Economic Area (EEA). According to a recent pressrelease, Revolut Ramp empowers users to execute crypto purchases effortlessly,utilizing their fiat currency balance within their Revolut accounts.Additionally, users have the flexibility to complete transactions using Visa orMastercard cards.

The announcement comes on the heels of Revolut's recentdeclaration in February, wherein the company revealed plans to introduce acryptocurrency tailored for "advanced traders." This development,disclosed through a customer email obtained by CoinDesk, underscores Revolut'scommitment to expanding its cryptocurrency services beyond the basic offeringscurrently available to its user base of over 40 million customers.

"This partnership is really about giving our users whatthey want more control over their crypto, in a straightforward way, usingplatforms they already know and trust," said Lorenzo Santos, the Senior ProductManager at Consensys (the developer behind MetaMask). "It also plays acrucial role in fostering broader crypto adoption, opening up the world ofcrypto to more people," added Santos.

Revolut has joined forces with MetaMask to offer Revolut Ramp, a feature that will let users top up their MetaMask wallets with their Revolut account. By @ledesmalyllah.https://t.co/AtJTLKECzh

Addressing Cryptocurrency Promotion Concerns

However, amidst the ambitious strides in cryptocurrencyintegration, Revolut encountered regulatory hurdles in December, prompting thesuspension of crypto services for its business clientele in the United Kingdom.The decision was attributed to the implementation of new regulations by theFinancial Conduct Authority, which sought to address concerns surroundingcryptocurrency promotions and compliance standards.

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UK’s Top Crime Agency Assembles Crypto Investigators to Tackle Misconduct

The UK’s law enforcement agency has advertised two positions for the role of blockchain investigator under the Complex Financial Crime Team (CFCT). This step is part of the National Crime Agency's (NCA) efforts to combat crimes related to cryptocurrencies.

The responsibilities for the two advertised managerial positions include overseeing the investigations of crimes related to cryptocurrencies. This is to ensure that these investigations are done in accordance with the Proceeds of Crime Act, which is legislation aimed at tackling money laundering and the confiscation of assets obtained through criminal activities.

Accredited Blockchain Experts

The ideal candidate must be experienced in blockchain analysis and have in-depth knowledge of laws related to digital assets in the UK and globally. Additionally, the agency stated that the candidate must be a member of the police force and an accredited financial investigator.

The latest development is part of the UK’s efforts to regulate the rising cases of illegal activities in the digital assets space. The CFCT is conducting investigations of financial crimes and working in partnership with the City of London Police.

On top of that, the NCA announced at the beginning of the year that it was strengthening its efforts to combat crimes in the cryptocurrency space by creating a special unit dubbed the National Cyber Crime Unit (NCCU) Crypto Cell. The NCA’s announcement followed the introduction of the Economic Crime and Corporate Transparency Bill in UK Parliament to give law enforcement agencies more power to combat illegal crypto activities.

UK’s Crypto Regulations

Some illegal activities related to digital assets in the UK involve unlicensed operations of crypto ATMs. More than two weeks ago, Finance Magnates reported that the Financial Conduct Authority had closed 26 illegal crypto ATMs since the beginning of the year. The FCA cautioned that unlicensed cryptocurrency ATMs contribute to illegal activities such as money laundering.

The UK is only one of the many countries strengthening their law enforcement agencies to combat illegal crypto activities. South Korea has launched a special investigations unit to tackle the rising cases of crypto-related crimes in the country. According to the South Korean Supreme Prosecutor’s Office, the losses from such crimes increased by nearly 120% for the entire five-year period, ending in 2022.

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Sunak Government Sets Summer Deadline for Stablecoins and Crypto Staking Clampdown

The UnitedKingdom government revealed plans this week to push through the long-awaitedcryptocurrency regulations within the next six months.

Speaking ata cryptocurrency industry event in London this week, Bim Afolami, the EconomicSecretary to the Treasury, stated that the government aims to establish ruleson stablecoins and staking services by August.

The UK to Enact CryptoRegulations in 224

Stablecoinsare cryptocurrencies pegged to traditional assets like the US dollar or poundsterling to minimize volatility. Staking allows cryptocurrency holders to earnrewards for helping validate blockchain networks.

"We'revery clear that we want to get these things done as soon as possible. And Ithink over the next six months, those things are doable," said Afolamiduring the Coinbase crypto event on Monday.

The movecomes after years of promises to regulate the multi-billion pound industry. InOctober 2022, the Treasury pledged to provide guidance on stablecoins andstaking, but a concrete timeline was never set.

The UK government plans to get new rules governing stablecoins and staking services for crypto assets approved by lawmakers within the next six months, Economic Secretary to the Treasury Bim Afolami says https://t.co/W2v6NBbPwA

Cryptocurrencyregulation was a core pledge of Prime Minister Rishi Sunak's leadershipcampaign in 2022. However, little progress has occurred since his election,hampering growth of the sector.

Thegovernment faces pressure to deliver rules before the next general election,expected in early 2025. But, Afolami admitted he could not provide a timelinefor regulating crypto exchanges and other major industry players.

"Theresjust a huge amount going on, so I dont want to commit to that now," hestated.

All eyeswill now turn to Westminster to track whether the government can turn this rhetoric into a reality within the next six months.

Light Crypto Regulation inthe UK

Thecryptocurrency industry contributes billions to the UK economy each year. Clearoversight is seen as necessary to protect consumers and facilitate ethicalinnovation in the space. It's worth noting that just a few months ago, the Bank of England claimed that stablecoins pose "a significant risk to financial stability."

Cryptocurrenciesare currently lightly regulated in the UK, but stricter rules are expected tocome into effect over the next year. The Financial Conduct Authority (FCA) isthe main financial regulator overseeing cryptocurrencies. So far, the FCA hasmainly focused on anti-money laundering rules for cryptoasset firms. Newrules introduced in 2023 brought crypto promotion and advertising under FCAregulation, including marketing and consumer protection standards. The FCAalso oversees some security tokens that provide rights akin to traditionalinvestments.

However,comprehensive formal regulation is still lacking but expected to come throughlegislation in 2024. The UK government has confirmed plans to regulate cryptoexchanges, trading platforms, custodians and more under traditional financialservices rules, likely including reserve requirements, governance, marketconduct and consumer protection.

The UK aimsto become a global hub for ethical crypto innovation. While cryptoassets remainhigh-risk investments currently lacking oversight, formal legislation is seenas essential to building trust and confidence, according to industry leaders.The entire industry is awaiting concrete action from the government to deliveron its promises of regulation within the next year.

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Watch Out for This Popular Crypto Exchange Clone

Life is noteasy when you are one of the largest cryptocurrency exchanges by volume andnumber of clients. On the one hand, you deal with regulators in different partsof the world, and on the other, with scammers who try to impersonate yourbrand. Coinbase is well aware of this and has again fallen victim to a clonecompany with the catchy name Coinbaseie.

Coinbaseie is NotCoinbase, Beware of Fraudsters

The UK financial regulator FCA recently warned British investors and savers againstthe activities of people who cold call consumers and send them emails from the Coinbaseie.comdomain, posing as representatives of the popular cryptocurrency exchangeCoinbase.

During theconversation, they encourage setting up a trading account, referring toCoinbase's regulations and reputation. However, as the FCA warns, they have noaffiliation with the real exchange, and sending them any money may involve aserious risk of losing it.

Notably, the FCA has flagged several phone numbers|: +447766855941, +35351571608, +447766855941,+35351571616, +31637827703. The regulator also advises caution with email addresses frommartinharvey@coinbaseie.com and anthonycollins@coinbaseie.com.

Misspellingthe names of fully registered entities is a popular strategy among scammers.The names Coinbase and Coinbaseie differ by only two letters, so many peoplemay not notice the slight difference and think they are contacting arepresentative of the popular platform.

Clones Everywhere

FinanceMagnates hasrepeatedly reported in recent months about fraudsters impersonating popularcompanies offering their services to retail investors. In January, scammers inthe UK posed as Admiral Markets and a few days earlier as XTB.

Victims ofclones also included Westpac and Hargreaves Lansdown, as well as the brokerSpreadex. In November, the FCA warned against an eToro and IG Markets clone,and, in October, against a counterfeit version of the Bitpanda cryptocurrencyplatform.

In order tobetter combat regulatory and cloning issues, Coinbase decided to hire a formerUK minister who joins the broker's advisory council in connection with itsglobal expansion. George Osborne, the previous Chancellor of the Exchequer,will advise the exchange on regulatory affairs and global expansion.

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