Government’s regulatory approach to crypto-assets and currencies

Regulation of cryptoassets has developed with the phenomenon itself. Overall, UK regulators have attempted to balance supporting innovation with protecting consumers and financial stability.

In 2018, the Cryptoassets Taskforce brought together the Treasury, the Financial Conduct Authority (FCA) and the Bank of England to coordinate responses.

In April 2022, the Government announced its plan to make the UK “a global cryptoasset technology hub”.

The FCA has taken various actions to protect consumers, through issuing warnings about the risks involved and banning the retail sale of certain financial products. The Government plans to give the FCA more powers to regulate financial promotions relating to cryptoassets.

Although the decentralised nature of cryptoassets trading makes regulation difficult, since 2020 the FCA has required businesses “carrying on cryptoasset activity in the UK” to seek registration and ensure compliance with anti money laundering and counter-terrorist financing regimes.

Given their potential as a means of exchange, the Government intends to bring stablecoins into the regulatory perimeter through the Financial Services and Markets Bill, whose second reading is scheduled for 7 September. The Bill would complement this by enabling the development of experimental “digital sandboxes”.