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Regulation of cryptoassets – the broader regulatory term that includes ‘cryptocurrencies’ – has developed alongside or in reaction to the phenomenon itself. Overall, UK regulators have attempted to balance supporting innovation with protecting consumers and financial stability.

Existing regulation

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

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.

Forthcoming regulation

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

Given their potential as a means of exchange, the Government intends to bring one type of cryptocurrency – stablecoins – into the regulatory perimeter through the Financial Services and Markets Bill, which begins Committee stage in the Lords on 25 January 2023. The Bill would complement this by enabling the development of experimental “digital sandboxes”.

The Economic Crime and Corporate Transparency Bill (whose report stage is scheduled for 24 January 2023) seeks to add references to cryptoassets to criminal and civil asset recovery powers.

Wider Parliamentary consideration

The Treasury Committee and the All-Party Parliamentary Group on Crypto and Digital Assets are both currently running inquiries into cryptoassets.

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