UK’s Crypto Legislation Promotion to be in Force Later This Year

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Indian government ready to proceed with Bitcoin ban The UK Treasure just published a draft of a new amendment that will regulate Bitcoin and crypto in the United Kingdom. Per the draft, the UK FCA (Financial Conduct Authority) will regulate crypto firms under existing laws. The government’s reasoning is that the new rules will help protect people from misleading crypto promotions, which is not a bad idea at all. It follows the UK government’s recent plans to recognize cryptos as a legal financial instrument.

The final draft of the legislation should be completed soon, with the rules set to be in force later this year. Per the new rules, crypto firms will be allowed time exempt to approve their ads instead of relying on others to do so. Right now, companies authorized under FSMA can approve their ads, but crypto companies do not fall under that umbrella.

Soon to be Discussed in Parliament

Following the government consultation in 2020, the score of UK’s financial regime has changed and expanded. It now covers a new category of financial instruments—cryptoassets—which the government sees as cryptographically secured digital representation of value and contractual rights that can be stored, transferred, or traded electronically. The new law intends to help customers make informed decisions on the risks associated with these assets.

The new rules are set to be discussed in Parliament soon. That much has been revealed by the UK Treasure in a tweet published on Monday. If it passes, and there are high hopes it will, it will essentially change the way cryptoasset firms market their services in the UK. The new financial promotions regime will take robust action against any company that breaches the rules.

It’s not a new thing as many think. The UK government published a policy statement back in January 2022 that acted as a basis for the new rules. It announced the government’s intention to introduce a bespoke exemption for cryptoasset companies and firms with the Financial Conduct Authority under Money Laundering, Terrorist Financing, and Transfer of Funds regulations released in 2017. With the new rules, all companies registered under the FCA under those regulations, but are otherwise not authorized, to communicate their own promotions to UK customers. The policy also announced the government’s intention to reduce implementation of the regime from six to four months, significantly cutting back the time.

What’s Next?

The UK government is actively seeking to bring the new rules into law. After discussions in the parliament, there will be a four-month implementation period to give crypto companies time to adjust. Once the rules come in to force, promotions of a qualifying cryptoasset will only be legal if approved by authorized firms, or if it falls under the exemption rules.

All crypto firms should ensure that they comply with the new regulations. Those who are not sure how it’ll work are free to seek legal advice. They must develop plans for when the rules come in to force, which the government hopes is by the end of 2023. It remains to be seen if it further helps the crypto market grow or if it spells more trouble.

April 5, 2023: • No Comments

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