The UK is taking necessary steps to regulate cryptocurrencies and stablecoins. On June 29th, 2023, the king permitted the Financial Services and Markets Act 2023, ushering in a new era of regulations on digital money in the UK.

This gives a way of controlling and safeguarding cryptocurrencies and stablecoins. Let’s hear and understand it through the lens of Crypto Accountants.

History of Crypto in the UK

Before FSMA 2023, the treatment of crypto assets under UK regulation was unclear. While the government recognized cryptocurrencies, they were not viewed as products that required financial regulation.

This ambiguity left businesses and investors with a lot of uncertainty, ultimately causing harm to the market.

The UK government has viewed the crypto market positively and negatively. This experience taught them that they required rules to promote innovative ideas while reducing risks.

Introduction to FSMA 2023

FSMA 2023 is considered a starting point for cryptocurrency rules in the UK. Here goes:

1. Types of Crypto Assets

The Act brings crypto assets under the financial laws. It defines them as digital representations of value or rights secured by cryptography.

2. Regulatory Oversight

That means FSMA 2023 powers regulators such as the FCA to regulate crypto activities, including licensing and regulating crypto exchanges, custodians, and similar businesses.

3. Focus on Stablecoins

The Act's first title deals with stablecoins- a cryptocurrency pegged to a fiat currency, like the US dollar. They are perceived as less volatile than other cryptocurrencies.

4. Consumer Protection

Improvement of consumer protection is another salient low of FSMA 2023. The Act has set its sights on eliminating scams, creating clarity, and establishing solid guidelines. It will help regulate enterprise players within the crypto market.

Future Implications of FSMA 2023

It is good that the advent of FSMA 2023 happened in the UK crypto industry. It prescribes clear-cut rules with stability to businesses and consumers. Here, we can expect:

1. Increased Institutional Interest

Clear rules can attract large investors who had previously considered the market too unpredictable.

2. Innovation with Safeguards

The Act encourages innovation but also has guidelines and regulations to address associated risks.

3. Increased Consumer Confidence

Clear rules also give people more confidence that the risks associated with crypto assets are better handled.

The Road Ahead!

FSMA 2023 is the first step to regulate cryptocurrency in the UK fully. More detailed legislation later, which will cover non-stablecoin cryptocurrencies, amongst other things, is likely.

This law means that the UK is a proactive global digital asset market leader. This move is intended to benefit consumers and businesses and boost the crypto industry's growth in the UK.

For more crypto tax, compliance, and due diligence related information, contact the Crypto Accountants.

UK Law: Regulations for Stablecoins and Crypto Assets