Key takeaways
- UK Cryptoasset Regulation: The UK government has outlined its proposals for regulating cryptoassets and promoting the adoption of distributed ledger technology (DLT) in capital markets.
- The FCA has launched a crypto roadmap that includes plans for policy publications on stablecoins, covering issuance, custody, backing assets and redemption.
- The government will also pilot a digital guilt instrument to explore how DLT can enhance the debt issuance process.
- Market participants should monitor developments closely to understand how these changes will affect their business and how best to respond to them.
The Treasury’s plans
Tulip Siddiq, Economic Secretary to the Treasury, recently spoke at the Tokenisation Summit, detailing the government’s crypto regulation plans, which focus on the following areas:
Cryptoasset regulation
- The government has updated the timetable for regulating cryptoassets in financial services.
- Proposals by the previous government aimed to introduce new regulated activities for cryptoassets.
- However, the UK General Election caused delays to the implementation of these proposals.
- The new UK government has now confirmed it will implement the proposals in full, with the following amendments:
- Stablecoin regulation will now be introduced alongside the broader regulatory regime for cryptoassets, rather than in a two-stage process.
- Stablecoins will not be brought into UK payment regulation.
- The government will eliminate legal uncertainty surrounding cryptoasset staking services, meaning they will not qualify as a collective investment scheme under financial services law.
- In 2025, the government will consult firms on the draft legal provisions for the cryptoasset regime, including stablecoins1.
Digital assets and the UK economy
- The UK aims to establish itself as a global hub for securities tokenisation.
- To support this, the Bank of England and FCA have launched the Digital Securities Sandbox to encourage the adoption of DLT across the capital markets.
- The government will pilot a digital gilt instrument (DIGIT) to explore how DLT can benefit the debt issuance process and stimulate the development of DLT platforms in the capital markets.
FCA’s crypto roadmap – UK Cryptoasset Regulation
The FCA has set out a crypto roadmap, which outlines key dates for planned policy publications on cryptoassets:
| Timeline | Publication |
| By end of 2024 | FCA will publish a discussion paper on admission, disclosure and market abuse regimes for cryptoassets. |
| By early 2025 | The government will engage firms on draft legislation for the cryptoassets regime, including stablecoins. FCA will publish a discussion paper on the rules surrounding cryptoasset trading platforms, including their ownership and considerations for cryptoasset exposures. |
| By mid-2025 | FCA will publish a consultation paper on: Backing assets and redemption of stablecoins Record keeping, reconciliation and segregation of cryptoassets The introduction of a new prudential sourcebook, including capital, liquidity and risk management |
| By end of 2025 | FCA will publish a consultation paper on all Regulated Activities Order (RAO) matters involving cryptoassets, covering matters such as: Systems and controls Consumer duty Complaints Conduct Governance (including Senior Managers and Certification Regime) |
| By early 2026 | FCA will publish a consultation paper on trading platforms, intermediation, lending and staking, as well as the remaining material for the prudential sourcebook. |
| By end of 2026 | The full regulatory regime on cryptoassets is set to go live. |
FCA’s plan for regulating – UK Cryptoasset Regulation
The FCA has published a blogpost summarising the outcome of its discussions with industry participants around the future regulation of cryptoassets. Key outcomes of those discussions are outlined below:
- Admissions and disclosures: There is a recognition that appropriate admission standards and proper disclosure to investors are critical for crypto market integrity and investor protection. Participants favour an industry-led admission and disclosure regime, which is proportionate and tailored to business models. However, they warned that compliance requirements, such as certain disclosure and due diligence requirements, may be challenging for decentralised cryptoassets where there is a need to rely on publicly available data.
- Market abuse regime: While crypto markets present distinct challenges for market abuse regulation – due to the international scope of crypto market abuse and the need to ensure compliance with international data privacy laws – the FCA aims to align crypto market abuse rules with those in traditional financial markets as far as possible.
- Trading platforms and intermediaries: The FCA is working to implement international crypto regulatory standards through its role in the International Organisation for Securities Commissions (IOSCO). It is also collaborating with industry and government to develop a market-abuse information sharing platform.
Conclusion – UK Cryptoasset Regulation
Industry participants have been keenly anticipating signs of progress towards a UK regulatory framework for cryptoassets. The greater clarity as to how the regime is intended to evolve and surrounding the proposed timeframe for its introduction will be welcomed, though the detail of the regime remains unclear. Interested stakeholders should keep a watchful eye as more detail is revealed through the draft legislation and FCA’s papers while there is still the chance to influence the shape of the regime and time to prepare for its introduction.
Mir Omar El Solh
Founder & CEO
Blockchain Legals
M. +420 776 513 613