UK Sets 2027 Timeline for Comprehensive Cryptocurrency Regulation
A future regulatory framework will help to prevent such occurrences in the future by ensuring a level of transparency, stability, and accountability.
Representation of bitcoin cryptocurrency is seen in this illustration taken January 11, 2024. Photo/Courtesy.
By Ruth Sang
The government of the United Kingdom has unveiled plans to establish a complete legal framework for governing companies dealing in cryptocurrencies by 2027. While these plans will promote innovation in digital finance, they will at the same time ensure protection of consumers. Based on information from the government, this approached will be tough but fair.
In a statement issued on Monday, the Treasury stated that firms operating in the crypto sector in the UK will come under the regulation of the Financial Conduct Authority (FCA) after new laws come into effect. The firms will thus be regulated in a uniform manner with other financial service providers in terms of ensuring they meet all standards of transparency and governance among other responsibilities.
The FCA has stated that it will set out a comprehensive regulatory framework for crypto-currencies by 2026, which will allow for a complete implementation of a new regulatory regime in the year after. With this in place, it will be a welcomed regulation in an industry, which up till now has operated in a rather fragmented way.
Chancellor of the Exchequer Rachel Reeves stated that “integrating crypto into our regulatory framework is a key step in ensuring our position in the world as a major financial center in a digital age,” because a “clear and predictable regulatory framework will give companies the confidence they need to invest, to innovate, and to create highly skilled jobs in this country.”
Reeves highlighted that this proposed legislation will improve consumer protection, especially with regards to “see millions of people who increasingly interact with digital assets.” Through this enforcement of a stronger regulatory presence, the government is working towards ensuring that scammers or improperly operating companies are not allowed into the UK market because of the potential financial losses associated with these elements.
The UK news is in line with steps being undertaken by other major economies. The European Union unveiled broad guidelines on handling all sorts of cryptocurrencies a year ago, and the US government has been working on a series of guidelines covering different segments of the crypto space. Such developments come at a time when a consensus seems to have emerged in different countries concerning regulation of digital currencies due to their increasing presence in financial systems.
Cryptocurrencies, such as bitcoin, have increasingly drawn the notice of regulators globally, especially in the wake of a series of high-profile bankruptcies and scandals. Recently, a series of failures among major crypto exchanges and trading sites have led to investor losses in the tens of billions of dollars, making evident a series of flaws in the regulation of this fledgling industry.
However, this attention escalated further last week with a US court sentencing a well-known cryptocurrency trader named Do Kwon to 15 years in prison over a case of fraud linked to the downfall of his firm. The incident led to a loss of an estimated $40 billion in investment capital for investors. As official statements from UK authorities assert, a future regulatory framework will help to prevent such occurrences in the future by ensuring a level of transparency, stability, and accountability for crypto operators. As Downing Street begins to introduce these new laws, all involved parties will need to keep a very close watch on future pointers from the FCA.
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