The Financial Services and Markets Act 2023, a reform bill in the United Kingdom, has been granted Royal Assent from King Charles on Thursday, officially making it a law, according to a Thursday press release by the UK government.
Under this new law, cryptocurrency trading is recognized as a regulated financial activity. The amended Financial Services and Markets Act defines crypto assets as "cryptographically secured digital representation of value or contractual rights," considering them as regulated financial instruments, products, or investments.
11. Promotes the use of new technology in financial services, enabling the regulation of cryptoassets to support safe adoption, and establishing ‘sandboxes’ that can facilitate the use of new technologies such as blockchain in financial markets.
— Andrew Griffith MP (@griffitha) June 29, 2023
Royal Assent is a procedural stage that follows the agreement of lawmakers on a bill, turning it into an Act of Parliament in the country. The bill had received approval from the upper house of Parliament on June 19 before reaching this stage.
The UK Treasury highlighted that the law's objective is to regulate crypto assets and ensure their safe adoption in the country. The new law is viewed as a significant step forward for the economy, with the government describing it as a "rocket boost."
“This landmark piece of legislation gives us control of our financial services rulebook, so it supports UK businesses and consumers and drives growth,” Economic Secretary to the Treasury Andrew Griffith said in a statement. “By repealing old EU laws set in Brussels it will unlock billions in investment – cash that can unlock innovation and grow the economy.”
Global race for crypto talents
The Financial Services and Markets Act 2023 also lays the groundwork for the advancement of the blockchain sector, paving the way for the establishment of "sandboxes," which are controlled environments that facilitate the testing and adoption of new technologies, such as blockchain, within financial markets.
"The formal recognition of cryptocurrencies in the UK represents a significant advancement for the broader crypto industry,” Jeff Feng, co-founder of blockchain development company Sei Labs, told Decrypt in an emailed statement. “It serves as an acknowledgement of the growing legitimacy of digital assets, something that is becoming increasingly crucial as countries worldwide compete for supremacy in the crypto and tech space.”
Praising the UK's “decisive regulatory approach to crypto may,” which can be considered an attempt to attract global tech talent and compete with other crypto-friendly countries, Feng added that “there's a global race underway to attract crypto firms and entrepreneurs, with the potential capital and job creation they bring.”
“Countries such as Hong Kong, Singapore, and now the UK, are emerging as front-runners in this regard, capitalizing on the U.S.'s lack of regulatory clarity,” he said.
The Financial Services and Markets Act 2023 will also enable the implementation of the Edinburgh Reforms—a package of more than 30 reforms to financial regulation, including the extension of tax breaks for investment managers to cover crypto assets.
Britain’s current Prime Minister Rishi Sunak outlined his ambition to make the UK “a global hub for crypto asset technology” in April 2022, coming forward with some proposed measures including stablecoins being “brought within regulation” so as to have them used as a recognized form of payment.
The bill’s other key provisions include enhanced scrutiny of financial services regulators, ensuring clear accountability, appropriate democratic input, and transparent oversight of financial services regulators, as well as protection of access to cash.