- The UK crypto industry anxiously awaits new rules.
- Crypto users increasingly want good rules.
A version of this story appeared in our The Guidance newsletter on October 28. Sign up here.
The UK lags the EU on crypto regulation.
While the ousted Tory government pushed to introduce new laws this summer, it will take the new Labour government at least another year to regain the momentum, says Gillian Lynch, head of Europe and Ireland at Gemini.
And that’s a good thing, she adds.
“If it means you get a really considered piece of regulation coming out in 12 to 18 months, that’s OK,” Lynch said.
That may be too long for some crypto lobbyists who worry that a lag could see the country lose out on business to the EU, as businesses seek a clear regulatory environment.
Brussels is rolling out one of the world’s most comprehensive regulatory frameworks for crypto: the Markets in Crypto-Assets regulation.
MiCA’s stablecoin rules are in place for exchanges, wallets, and other crypto asset service providers. They will kick in at year-end.
What’s happening with the UK’s rules?
The UK Treasury published its final proposals for crypto regulations in October 2023. The Financial Conduct Authority is working on the finer details of these laws.
Bim Afolami, the minister responsible for the financial services sector, promised they’d be ready by summer 2024 — but a snap election that Labour won put paid to that.
Lynch’s prediction is more pessimistic than other UK crypto insiders I’ve spoken to, who agree we could see laws proposed as early as the end of the year.
But “you’ve got this change in government, and that always delays the implementation of a [regulatory] regime,” Lynch said.
“If you’re only at the starting point of a new government, you’re still 12 months away at least from bringing something in.”
Worth the wait
Still, Lynch said, in some respects, it’s worth the wait, because MiCA will test many new regulatory concepts — some of which may require some fine-tuning.
There’s already talk in policy circles of a “MiCA II” — an update to fill in gaps and tidy up messy things in MiCA.
“Regulators globally are going to watch MiCA to see what works and what doesn’t,” Lynch said.
Meanwhile, the FCA is bringing in rules that could form part of a future regime.
Late last year it expanded existing rules on how financial firms are allowed to market themselves to crypto businesses.
The strict rules saw PayPal and Binance suspend services to the UK.
Lynch conceded that the promotions rules are hard. But, she said, compliance is the cost of doing business, that it’s what consumers expect.
Gemini ran a survey of 6,000 people in four major markets, including the UK and US.
Almost 40% of respondents who did not own crypto said regulatory concerns kept them from entering the market.
For now though, UK crypto rules are a waiting game.
Reach out to me at joanna@dlnews.com.