The Treasury of the United Kingdom has unveiled its proposed digital asset legislation just one day before members of Parliament are scheduled to begin debating the measures.
Existing rules for banking and payment systems will be modified or extended to cover digital assets, according to an online copy of the legislation. The proposed regulations are part of 335-page financial services and markets bill aimed at bolstering the United Kingdom’s financial systems in the aftermath of the country’s exit from the European Union.
The bill refers to cryptocurrencies as “digital settlement assets,” (DSAs) or “a digital representation of value or rights.” The rules will primarily apply to stablecoins, which are cryptocurrencies whose prices are tied to another asset, such as the US dollar, as well as other digital assets used for payments or settlements. The file’s interpretation of DSAs also includes digital assets utilized for payments that aren’t “cryptographically secured.”
The rules follow a turbulent few months for crypto markets, which saw several prominent crypto companies crash and around $2 trillion leave the industry. The regulation also follows the UK government’s promise to turn the country into a crypto hub, which was threatened by a series of cabinet resignations.
A Treasury consultation released in May hinted at the inclusion of stablecoins under UK payments regulation. Before resigning in early July, John Glen, a Treasury minister of state, stated that incorporating stablecoins into the payments system will allow consumers to use stablecoin payment services with confidence.
The DSA regulations, which are organized under Schedule 6 of the new bill, suggest amendments to the Banking Act 2009, which establishes the central bank’s oversight of payment systems in the United Kingdom. It also intends to apply a section of the current Financial Services (Banking Reform) Act 2013 to payment systems involving DSAs.
The rules seek to amend the Banking Act through “DSA service providers,” such as digital asset issuers, exchange platforms, wallet providers, and anyone who sets rules, standards, or conditions of access or participation concerning the payment system.
The Treasury, according to the document, retains the authority to create and modify the regulations presented in the file as it sees fit. It also states that the Treasury must consult with the UK’s Financial Conduct Authority (FCA), the Bank of England, and other applicable payments regulatory bodies before implementing the Schedule 6 regulations.
The Treasury could use a “recognition order” to target a DSA service provider for regulatory action within the United Kingdom if the services provided (or disruptions in providing services) are likely to threaten financial stability or have “serious consequences for business or other interests” across the country.
The bill was introduced to parliament on Wednesday and is scheduled to go through the first round of debates on Thursday.
Source link
