The United Kingdom is gearing up to introduce new legislation for cryptocurrencies and stablecoins by June or July 2024, according to the Economic Secretary, Bim Afolami. Speaking at the Innovate Finance Global Summit on Monday, Afolami stated that the government is working swiftly to deliver the legislation that will put the final proposals for the crypto regulatory regime in place.

UK Set to Introduce New Crypto and Stablecoin Regulations by Mid-2024

"We are now working at pace to deliver the legislation to put our final proposals for our regime in place," Afolami said during the Innovate Finance Global Summit.

The announcement comes after the UK passed the Financial Services and Markets Act in June 2023, which enabled cryptocurrencies to be treated as regulated financial activities.

“Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time,” the Economic Secretary added.

The government has expressed its intention to make the UK a preferred destination for the crypto industry and plans to bring relevant activities under the purview of the Financial Conduct Authority (FCA). In the meantime, new regulations concerning the promotion of digital assets have come into effect in the country.

“While it remains to be seen exactly what new regulation may look like and how it will be enforced, it’s inevitable that the future of crypto lies within far more regulated and supervised parameters,” Duncan Ash, the Head of Strategy at blockchain protection firm Coincover commented in an op-ed article for Finance Magnates.

Regulatory Winds of Change

Under the new regulations, a wide range of crypto asset activities will fall within the regulatory perimeter for the first time, including operating an exchange, custodial services, and other related activities. The FCA will soon consult on an authorization regime for crypto companies, and the government also plans to formulate equivalence measures for overseas firms.

The UK government has taken a phased approach to introducing crypto regulations, with legislation for fiat-backed stablecoins being the first priority. Other areas, such as algorithmic stablecoins, will follow as the government brings activities like lending and trading into the fold of conventional financial regulation.

Despite the government's efforts to create a crypto-friendly environment, the UK industry has faced some challenges. Crypto firms have complained about delays and poor feedback from the FCA, and recently introduced rules restricting crypto promotions have led some well-known firms to cut UK services altogether. According to data from February 2024, the market watchdog issued over 450 alerts on illegal crypto ads in just three months.

In Europe, Poland is additionally preparing to regulate cryptocurrencies later this year. Under new laws, the local financial supervisory authority, KNF, will be allowed to block the cryptocurrencies of companies and users for 96 hours in cases of mere suspicion of unregulated trading.