- UK crypto service providers and issuers have new laws to comply with after summer.
- Anti-money laundering provisions and financial promotion rules kick in soon.
- A bill that gives authorities more power to seize crypto assets from criminals could be rubber-stamped soon too.
Hi, Inbar here. I’m stepping in for Joanna today, who is taking some time off.
This week, Coinbase had a big win on Capitol Hill. Two years after applying to offer eligible users futures trading, approval came through. The crypto exchange is now registered with the National Futures Association, Coinbase confirmed on Wednesday.
Across the Atlantic, we are heading towards the end of the summer. Policymakers will be back in office at the end of August.
The UK will be particularly action-packed on the crypto policy front come autumn. Afterall, there’s lots to do to manifest Prime Minister Rishi Sunak’s promise to transform London into a crypto hub — a vision which has had some setbacks lately due to diverging political views on the asset class, falling venture capital investments, complex regulatory bureaucracy, and the spectre of Brexit still haunting the country.
So if you’re looking to find heads and tails after a well-deserved break, I got you. Here are five dates to mark in your calendars to stay on top of the UK’s agenda in the coming weeks, plus a bonus at the end.
And, I spoke to senior policy advisor Isabella Chase from blockchain intelligence firm TRM Labs to help break down what it all means.
1. Financial Services and Markets Acts comes into force
29 August: The FSMA, or at least big parts of it, comes into force next week. For crypto, the recently rubber-stamped law is a big step into regulatory lucidity by setting a new definition. Essentially, crypto assets have now officially graduated into financial products and services under the law.
What will change? Stablecoins will be regulated by HM Treasuring and the UK’s finance supervisor, the Financial Conduct Authority. And, the FSMA also introduces a sandbox for a novel market infrastructure, so participants can play around with blockchain-based financial railings.
We don’t want to say we told you so, but Joanna and I did report that the new legislation could be in place by autumn earlier this summer. So this should come as no surprise, ‘cause you have been keeping up with us, right?
2. UK’s Travel Rule implementation
1 September: The so-called Travel Rule is coming into force. The anti-money laundering provision means that crypto firms will have to collect identifying information about those sending and receiving transactions.
PayPal, for one, is not happy about this. PayPal will stop its crypto sales in the UK until 2024 because of the stricter regulations kicking in.
What can be achieved when you have really good criminal and civil asset recovery powers is huge— Isabella Chase, TRM Labs
The FCA published its final guidance on how to implement 20 days ahead of the implementation date. This means that the UK is ahead of the European Union in implementing the travel rule.
The European version will come into force at the end of 2024, bringing to life recommendations from the global illicit financing watchdog, the Financial Action Task Force.
3. Economic Crime and Corporate Transparency Bill vote
4 September: First a fair warning, the date for the Economic Crime and Corporate Bill may not get voted on this day. This bill is at the end of its legislative road, and just needs a final approval to reach Royal Assent.
The houses of parliament are returning to their benches on the fourth, so the economic crime bill could get its rubber stamp then already, if it’s not pushed down the agenda. As always, the realities of politics could kick the can further down the road.
So what does it mean for crypto?
“There will be changes to the civil and criminal asset recovery powers of the police and other supervisory authorities to make it easier to seize and realise, in a successful prosecution, criminal crypto assets,” Chase said.
And, there would be new rules to allow private individuals and firms to share information about suspicious activity. “What can be achieved when you have really good criminal and civil asset recovery powers is huge,” she added.
Bitfinex, for example, was able to recover $3.6 billion worth of stolen Bitcoin last year when the US Department of Justice seized funds linked to a 2016 hack. The married couple behind the hack pleaded guilty earlier this month.
4. Financial promotions regime goes live
8 October: Companies offering crypto services have seven weeks to get their act together for ads. They have four ways to ensure promotions are authorised by regulators.
A failure to comply is “a criminal offence punishable by up to two years imprisonment, an unlimited fine, or both,” the FCA warned firms in July.
Chase pointed out that this regime is a whole lot of work for the crypto industry:
“The problem is that any financial promotion that can reach a UK consumer, regardless of where it’s produced in the world, can fall under the regime so you end up with this massive scope that might be challenging to enforce.”
5. Government report on crypto asset framework
Mid to late October: You’re right, that’s not a precise date. But Chase is anticipating the UK government report — from collecting all the responses to the crypto regulation consultation — to come soon.
In February, authorities put out a framework for supervising crypto for experts to comment on. This would compete with MiCA in the EU, and lawmakers are hoping a new framework to be in place well before the next elections, or autumn 2024 (hint: part of MiCA goes live 31 December, 2024).
So, the clock is ticking. A report concluding findings from the expert commentary is the next step before legislators can draft a bill.
Bonus round: Party conferences
The UK’s political parties each hold their annual sessions to nominate their leadership bodies. Conservatives will meet 1 to 4 October, while the Labour party will meet from 8 to 11 October.
“Will crypto feature? Probably not,” Chase said. But, that doesn’t mean it isn’t worth looking out for.
“We might see something from the Conservatives about having a competitive and innovative financial sector, which includes supporting digital assets,” she said.
Whether something will come out of the Labour party is more of a “mystery.”
Reach out to me at email@example.com or on Telegram @InbarPreiss.