The UK’s Financial Conduct Authority has issued a discussion paper with early plans for crypto regulation. It provides a road map to possible rules covering crypto trading, stablecoins, and market practices. This is not yet law.
The FCA document follows a 2023 government decision to regulate the activities of crypto assets. At first, the government proposed a “phased approach” toward legislation: first, stablecoins, followed by broader crypto trading.
At that time, lawmakers defined digital assets broadly. They included any digital representations of value that are transferable and tradable and use secure technologies like distributed ledgers. The government plans to refine this definition later to suit specific regulations.
However, in Nov. 2024, the new administration scrapped this phased plan. Instead, all crypto-related activities, including stablecoins and trading platforms, will be addressed simultaneously.
The two major components proposed are the market abuse regime for crypto assets, or MARC, and the admission and disclosure regime, or A&D. This should protect against market risks but make the regime transparent without strangling innovation.
Global collaboration on crypto standards
International collaboration plays a key part in the FCA’s vision. The regulator helped develop the IOSCO Crypto and Digital Assets Recommendations, a set of guidelines that set the global standard in crypto regulation.
The FCA now leads in the efforts to ensure these guidelines are implemented internationally. It works with the FSB through close cooperation on common challenges that digital assets pose in its regulation.
The FCA invites comments from both domestic and international stakeholders. The FCA invites comments on the possible effect of its proposals on businesses, costs, and market developments. Stakeholders are invited to highlight any unintended consequences or suggest alternative solutions.
Whereafter the regulator promises further engagement through forums and meetings, and it does assure that the feedback will be fed into the formal consultation process prior to the drafting of the new rules.
This discussion paper was another milestone in the UK’s journey towards instituting a structured crypto regulatory regime. The FCA has struck a balance-managing the risks and facilitating market development.
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