Amendment to UK financial services bill provides regulation for crypto activities

An amendment to the Financial Services and Markets Bill now before the United Kingdom's Parliament would extend the law’s powers to regulate financial promotion and other activities to crypto assets. The amendment was written by Member of Parliament and Financial Secretary to the Treasury Andrew Griffith. 

The 335-page bill was introduced in July and had its second reading in the House of Commons on Sept. 7. According to the explanatory statement accompanying the amendment, it would:

“[...] clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities relating to cryptoassets.”

The Financial Conduct Authority (FCA), the U.K.'s financial regulator, published a “Dear Chief Executive” letter Aug. 9, which detailed its supervisory strategy over financial firms’ so-called "alternatives portfolio." The letter stated: “We will publish final rules for the promotion of crypto assets once the Treasury formalises legislation to bring these into our remit.”

Related: FCA green lights Revolut, making no UK crypto firms operating under temporary status

Most crypto-related businesses in the U.K. are not under the control of the FCA now, though they have the option of applying for registration and will be required to do so next year. The registration process currently looks only at Anti-Money Laundering and Countering the Financing of Terrorism measures and has proven challenging for many applicants.

It was a pleasure to give evidence to the House of Commons Financial Services & Markets Bill Committee today, answering questions from @griffitha @TulipSiddiq and @MartinJDocherty on UK regulatory competitiveness, crypto-assets and stablecoin. More here: https://t.co/J0f1OCtqb5 pic.twitter.com/ZzjCwaPEiD

— Adam Jackson (@Adam_E_Jackson) October 19, 2022

The FCA also took action on the advertising of high-risk financial products in August, and explicitly stated that crypto assets can be risky but the agency was not yet regulating them. The country’s Advertising Standards Authority has been more aggressive in monitoring crypto-related advertising.

Griffith’s predecessor as financial secretary Richard Fuller stated in September that the government was committed to making the U.K. a “hub for crypto technologies.” On Oct. 10, the European Parliament Committee on Economic and Monetary Affairs passed the Markets in Crypto-Assets bill and a full parliamentary vote is expected soon.