On Tuesday, the United Kingdom’s finance minister, Rachel Reeves, announced that the country is planning to legislate for the proper regulation of crypto-assets. In essence, Reeves’ statement indicates the first steps of the UK government towards establishing a comprehensive legal framework for the digital asset industry, other than laws dealing with anti-money laundering. The statement comes at a time when interest and ownership of crypto-assets are rising among the UK population.
Set against this growing adoption, however, current regulation looks outdated.
The move to legislate dedicated crypto laws comes against a background of significant adoption data within the UK. According to a survey released by the Financial Conduct Authority (FCA) in July 2024, 12 percent of the UK population as a whole had access to some form of crypto-assets. This includes an estimated 7 million adults in the UK, which certainly points to a growing interest and increased uptake of this asset class by the population. Due to a lack of specific comprehensive regulations governing crypto, the FCA has, up to this point, administered crypto-asset businesses using the existing Money Laundering Regulations (MLRs). This, like many other attempts to regulate, sought to eliminate financial crime instead of providing a regulatory framework for market activity and consumer safeguards.
Proposed crypto legislation intends to encourage innovation in digital assets while preventing bad actors from harming innovation in the industry. Other legislation intent aligns with the increasing ratio of accepted digital assets, used to enrich the “responsible” usage of technology throughout the globe.
Reeves’ statement explains the intention and scope of bilateral cooperation, indicating the primary policy focus lies within the regulatory frameworks of cryptocurrency within the UK and USA. In this sense, proposing legislation seems optimistic, aiming at addressing major problems through regulations that would benefit mutual understanding. The Won lawmakers also aim directly towards peers across the ocean, encouraging upstanding usage within proponents of digital assets and malpractitioners dealing with cryptocurrencies.
Industry Reaction and Policy Alignment
The recently proposed legislation is said to have received in-principle endorsement from crypto industry specialists. These specialists have shown displeasure with the FCA’s prior system of digital asset firm registration because they deemed it overly progressive. In their opinion, the new legislation is likely to further strengthen UK interests and align them with US interests more closely in terms of crypto regulations. Additionally, they argue that this new approach marks a departure from the European Union’s (EU) approach towards crypto under the Markets in Crypto Assets Regulation (MiCAR) and implies a distinct regulatory framework for the UK post Brexit.
Complementary to the previous one,
Minister Reeves has also revealed the intention of the UK government to draft and make public the broader strategy for the financial services sector that accompanies the specific cryptocurrency legislation. The strategy, Financial Services Growth and Competitiveness Strategy, claims to be the first of its kind for the UK and is set to be released in July this year. As a complement to the previous strategy, the Financial Services Growth and Competitiveness Strategy aims to enhance the UK’s position as a global financial center while also addressing the expansion of various financial services sectors over time.
Minister Reeves’ Statement
Rachel Reeves, the Minister of Finance, also pointed out the importance of the planned legislation in relation to the government’s overall goals. She said, “Through our Plan for Change, we are making Britain the best place in the world to innovate—and the safest place in the world for consumers.” She makes clear the reserve of these supportive policies as the innovation economy will aid consumer protection.
Legislative Framework for Digital Asset Ownership
The most recent crypto legislative action in the UK follows the earlier introduced Property (Digital Assets) Bill from Parliament. That prior bill sought to provide a legal status of digital holdings and aimed to classify them as personal property. With regards to English digital belongings, English judges had previously been struggling with the implications as to whether there existed some form of ownership disputes, including legal proceedings like divorce disputes. This new framing legislation is hoped to resolve some legislative gaps that exist pertaining to digital crypto technology. This legislation is also expected to facilitate the UK’s aspirations of becoming the center of the world for digital assets. The author goes on to explain how crypto-assets may classify any tokens, Bitcoin, Ethereum, and non-fungible tokens as any digital representation of value that is electronically tradable.
