The UK crypto industry received another boost on Thursday as the Financial Services and Markets Act 2023 became the law of the land. The act, a milestone in the UK’s independent financial rulemaking after leaving the European Union, promotes the regulation of cryptoassets in support of their wider adoption.
The Act also introduces new objectives for the UK’s regulatory bodies, including the Financial Conduct Authority and the Prudential Regulation Authority. The reforms aim for a strengthening of regulatory scrutiny and accountability by mandating regular reporting and emphasizing cost-benefit analyses.
The Bill Puts UK Crypto Under the Jurisdiction of Financial Regulators
The UK government hopes that by repealing EU laws, the Act will unlock investment opportunities and improve economic growth. Few people question the need for that to happen. The country, which has the highest inflation in the G7, has struggled to recover from the COVID-19 pandemic.
The UK economy remained stagnant in the first quarter of 2023, with GDP growth of just 0.1%, according to the Office of National Statistics (ONS). Worse still, the monthly estimates reveal a decline of 0.3% March 2023 after an increase of 0.5% in January, and no growth in February.
The bill will also allow the implementation of the Edinburgh Reforms, a package designed to boost the financial services sector. Included in the reforms are widened remits for the country’s financial regulators to focus on growth and international competitiveness.
Learn the cost-benefit analysis of regulating crypto and digital assets: Crypto Regulation: What Are the Benefits and Drawbacks?
Under the new regime, cryptoassets such as stablecoins will be under the official jurisdiction of the country’s financial regulators. It also establishes “sandboxes” to enable the safe adoption of emerging technologies like blockchain in financial markets.
In a statement, Economic Secretary to the Treasury Andrew Griffith said that 2023 is shaping up as a “banner year” for financial reforms. He added:
“This landmark piece of legislation gives us control of our financial services rulebook, so it supports UK businesses and consumers and drives growth. By repealing old EU laws set in Brussels it will unlock billions in investment – cash that can unlock innovation and grow the economy.”
OpenAI Recently Announced It Is Setting up in London
Since Rishi Sunak, who is now prime minister, entered the Finance Department in 2019, the country has been trying to establish itself as a crypto hub. Sunak himself has been very supportive of the industry and celebrated the news of companies locating themselves in Britain.
The country is becoming a hub for the wider tech industry, too. This week, OpenAI, the company behind ChatGPT, announced it would establish its first overseas base in London. The company is headquartered in San Francisco, California.
Despite the challenges of Brexit, the UK (and more specifically, London) remains the tech capital of the continent. Last year, the country became the third to have a $1 trillion tech sector, after the United States and China.
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