Partner Nicola McKinney explores how provisions to the Financial Services and Markets Act 2023 impact the regulation of crypto assets.
Nicola’s comments were published in CDR Magazine, 4 September 2023, and can be found here.
“Upcoming amendments to the Financial Services and Markets Act 2023 concerning crypto assets reflect the landscape of increasing regulatory action in the crypto sector, with high levels of public interest, together with recent high-profile reports of fraud, financial crime and investor losses in the digital assets industry, causing increased policy scrutiny over how the sector should be both promoted and regulated in the UK.
“However, the new FSMA provisions are in reality very limited in scope, given the diversity of crypto asset products that are now available, the frequency of innovation, and the ways in which consumers interact with them. Regulators, policymakers and parliamentary bodies have thus far been inconsistent in their tone and recommendations on how these crypto challenges should be met, with divergent attitudes and conflicting strategies emerging as to how digital assets should be treated if the UK is to realise its goal of becoming a global crypto hub.
“Notwithstanding the policy-level tensions, the recently announced provisions continue the likely direction of travel, looking to further bring services around crypto asset within the regulatory remit of the FCA and other bodies, and expanding the existing framework, while other elements of the Act, such as the creation of a digital securities sandbox, have an eye on making provision for new technologies.
“Collaboration, particularly across national borders, will prove key in the UK’s race to establish itself as a world-leader in digital assets. Regulators, policymakers and the crypto industry itself must coordinate to establish effective regulation, while also being agile enough to respond to crypto’s constantly-evolving nature.”
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