Shalini Nagarajan

<div id="highlights-block_63590bfc93163" class="highlights">
 <ul>
 <li>Under proposed measures, the Treasury would have the power to amend the definition of cryptoassets</li>
 <li>Final conclusion of the bill is set for Nov. 3</li>
 </ul>
 
</div>



UK lawmakers have voted in favor of a crypto-related amendment to the Financial Services and Markets Bill, but it could take a while until the proposed rules are enacted.



The House of Commons, the UK Parliament’s lower house, met on Tuesday for a reading of the bill, which tailors financial services regulation to UK markets post-Brexit.



The bill is intended to remodel the country’s regulatory framework, including setting out a range of measures that place the country in a more competitive financial position in the future.



The wide-ranging financial bill earlier sought to <a href="https://cms.blockworks.co/uk-to-regulate-stablecoins-as-a-form-of-payment-via-new-bill/" target="_blank" rel="noreferrer noopener">regulate stablecoins</a> as a form of payment. It now includes regulations around both stablecoins and cryptoassets, among a list of other proposed amendments by several lawmakers.



Parliament member Andrew Griffith proposed that the term cryptoasset be defined as “any cryptographically secured digital representation of value or contractual rights” that can be transferred, stored or traded electronically and uses blockchain technology.&nbsp;



New powers outlined in one clause state that “financial instruments, financial products and financial investments” may include cryptoassets. If the bill is enacted in its current form, the Treasury would have the power to amend this definition.



“This new clause amends the Financial Services and Markets Act 2000 to clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities relating to cryptoassets. Cryptoasset is also defined, with a power to amend the definition,” Griffith wrote in the <a href="https://publications.parliament.uk/pa/bills/cbill/58-03/0146/amend/finserv_day_pbc_1025.pdf" target="_blank" rel="noreferrer noopener">amendment paper</a>.



Griffith <a href="https://cms.blockworks.co/uk-proposes-bringing-crypto-under-regulatory-eye/" target="_blank" rel="noreferrer noopener">introduced</a> the amendment in parliament last week, signaling that the bill would bring crypto under its scope. That came after the UK’s Financial Conduct Authority in August <a href="https://www.fca.org.uk/news/press-releases/fca-clamps-down-marketing-high-risk-investments-consumers" target="_blank" rel="noreferrer noopener">finalized</a> stronger rules to ensure that firms marketing “high-risk investments” include better risk warnings.



Measures outlined in the bill would impact restrictions relating to the promotion of cryptoassets.&nbsp;



Alexander Tkachenko, CEO at asset tokenisation platform VNX, weighed in on the draft bill, suggesting that a variety of cryptoassets should be regulated differently.&nbsp;



<blockquote class="wp-block-quote">“Security tokens are actually regulated as financial instruments in the EU, for example,” he told Blockworks, referring to digitized versions of real-world investments such as stocks and bonds.</blockquote>



“However, utility tokens do not meet such criteria and shouldn’t fall under the category of financial instruments. If UK lawmakers follow this path, this would be in line with the EU approach to cryptoasset regulation and be positive for crypto industry development,&#8221; he said.



<h3>Bill introduced while Sunak was Chancellor of the Exchequer</h3>



Rishi Sunak, who recently <a href="https://cms.blockworks.co/incoming-uk-prime-minister-is-pro-crypto%EF%BF%BC/" target="_blank" rel="noreferrer noopener">bagged the top job</a> to lead the UK, helped formulate the landmark bill while he was still chancellor of the exchequer. Sunak is hailed as a “<a href="https://www.dtnext.in/business/2022/10/26/crypto-world-calls-sunak-a-champion-of-fintech-2" target="_blank" rel="noreferrer noopener">champion of fintech</a>” by the industry for wanting to make the UK a global hub for crypto technology and investment. 



“This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation,” he <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub" target="_blank" rel="noreferrer noopener">said</a> earlier this year about measures to adopt crypto regulation.



As part of his crypto-friendly proposals, he also proposed launching an official <a href="https://cms.blockworks.co/uk-treasury-asks-government-coin-issuer-to-mint-nft/" target="_blank" rel="noreferrer noopener">Royal Mint NFT collection</a> in April.



Sunak could help provide more clarity for crypto regulation in the UK if he follows through with his aims from earlier this year, according to Marcus Sotiriou, analyst at digital asset broker GlobalBlock.



“Liz Truss’ leadership led to political and economic instability, as the pound almost reached parity with the dollar shortly after she started her role as prime minister. It is believed that Rishi Sunak is significantly more competent when it comes to economic matters, hence potentially leading to less fear in UK markets in the short term,” Sotiriou said, adding that the new leader faces a tough few months ahead.



The bill will now proceed for a third reading, after which it will be sent to the Upper House of Parliament. A final conclusion is set for 5:00 pm UK time on Nov. 3. Recently-crowned King Charles III will be required to grant his Royal Assent for it to become law.



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UK Regulation of Crypto as Financial Product Edges Closer

Bessie Liu

<div id="highlights-block_6356be578af25" class="highlights">
 <ul>
 <li>The newly elected UK prime minister wants to “fix our economy, unite our Party and deliver for our country”</li>
 <li>Sunak previously asked the Royal Mint to create NFTs to demonstrate the country’s commitment to investing in cryptocurrency technology</li>
 </ul>
 
</div>



The United Kingdom’s incoming prime minister may be a bullish indicator for the country’s crypto prowess.&nbsp;



Former Chancellor of the Exchequer Rishi Sunak is set to take the seat following the resignation of Liz Truss — who was in office for just 45 days.



Handpicked by fellow Conservative Party members on Monday, Sunak, the son of Indian immigrants, will be the first person of color to lead the country. The 42-year-old will also be the youngest prime minister in more than 200 years.



During his time in office under former Prime Minister Boris Johnson, Sunak made his interest in cryptocurrencies and blockchain technology known.&nbsp;



He has <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub" target="_blank" rel="noreferrer noopener">spearheaded plans</a> to make the UK a hub for cryptoasset technology and investments and advocated for stablecoins’ recognition as a form of payment.&nbsp;



“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” Sunak <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub" target="_blank" rel="noreferrer noopener">said in a statement</a>. “This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”



Sunak has previously raised eyebrows in the British parliament after he asked the Royal Mint, the creator of British coins, to <a href="https://cms.blockworks.co/uk-treasury-asks-government-coin-issuer-to-mint-nft/" target="_blank" rel="noreferrer noopener">create NFTs</a> as a way to demonstrate the UK’s commitment to devling into cryptocurrency technology.&nbsp;



Although it is unclear how the UK Conservative Party will respond to Sunak’s pro-crypto leanings once he is in office, the newly elected prime minister tweeted that he plans to “fix our economy, unite our Party and deliver for our country.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The United Kingdom is a great country but we face a profound economic crisis. That’s why I am standing to be Leader of the Conservative Party and your next Prime Minister. I want to fix our economy, unite our Party and deliver for our country. <a href="https://t.co/BppG9CytAK">pic.twitter.com/BppG9CytAK</a>&mdash; Rishi Sunak (@RishiSunak) <a href="https://twitter.com/RishiSunak/status/1584114970723512321?ref_src=twsrc%5Etfw">October 23, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Simon Jones, CEO of <a href="https://cms.blockworks.co/tag/voltz/" target="_blank" rel="noreferrer noopener">Voltz Labs</a> — a novel DeFi primitive empowering novel interest rates swaps based in the UK — told Blockworks that based on his previous time in parliament, the newly elected prime minister seems to be “more inclined to put in favorable [crypto] policies.”



“To my knowledge, he is the politician in the UK who is most positive towards crypto, and he&#8217;s now the prime minister,” Jones said. “That is a positive thing for the sector.”



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Incoming UK Prime Minister Is Pro-crypto

Casey Wagner

<div id="highlights-block_624b32c0355de" class="highlights">
 <ul>
 <li>The UK doubled down on its crypto plans Monday with the announcement that an NFT may be minted by this summer</li>
 <li>The country’s finance ministry said it is prioritizing stablecoin regulation in a Monday report</li>
 </ul>
 
</div>



In another effort to become a leader in digital asset technology, the United Kingdom’s Treasury has asked the Royal Mint, the agency responsible for creating British currency, to mint an NFT.



Chancellor Rishi Sunak has asked the government-owned coin issuer to create an NFT (non-fungible token) by this summer, according to a <a href="https://twitter.com/hmtreasury/status/1510971092072079360?s=20&amp;t=e3eIXViAapGmOnL8d6oMxA" target="_blank" rel="noreferrer noopener">tweet</a> from the Treasury account Monday.



​​Economic Secretary to the Treasury John Glen addressed the news during his <a href="https://www.gov.uk/government/speeches/keynote-speech-by-john-glen-economic-secretary-to-the-treasury-at-the-innovate-finance-global-summit" target="_blank" rel="noreferrer noopener">keynote speech</a> at the Innovate Finance Global Summit on Monday.



“I am announcing today that the Chancellor has asked the Royal Mint to create a non-fungible token, an NFT&#8230;to be issued by the summer, an emblem of the forward-looking approach we are determined to take&#8230;and there will be more details available very soon,” Glen said.



The move comes as the UK’s finance ministry <a href="https://cms.blockworks.co/uk-aims-to-let-consumers-use-stablecoin-services-with-confidence/" target="_blank" rel="noreferrer noopener">announced its plans</a> to prioritize stablecoin regulation in a report released Monday. The ministry said it will be releasing further regulatory guidelines this year in an effort to protect consumers.



“We want this country to be a global hub — the very best place in the world to start and scale crypto companies,” Glen said. “If there is one message I want you to leave here today with, it is that the UK is open for business, open for crypto businesses.”



Sunak, who was unable to attend the summit, has not yet provided any additional information about the NFT.



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UK Treasury Asks Government Coin Issuer To Mint NFT

Ben Strack

<div id="highlights-block_61e6ee4b93e84" class="highlights">
 <ul>
 <li>The UK’s Advertising Standards Authority censured Arsenal Football Club last month for promoting tokens to fans without proper warnings</li>
 <li>The government’s plan follows similar efforts by agencies in Spain and Singapore</li>
 </ul>
 
</div>



The UK government shared plans to bolster its rules on crypto advertisements in an effort to protect consumers from misleading claims.&nbsp;



The plans call for bringing the advertising of cryptoassets under the rules of the Financial Conduct Authority (FCA) — the same standards that stocks, shares, and insurance products are held to, the UK government <a href="https://www.gov.uk/government/news/government-to-strengthen-rules-on-misleading-cryptocurrency-adverts" target="_blank" rel="noreferrer noopener">revealed Tuesday</a>.



The UK launched its Cryptoasset Taskforce in 2018, and Rishi Sunak, Chancellor of the Exchequer, said in a statement that the government is eager to support innovation in the crypto space.



“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest, but it’s important that consumers are not being sold products with misleading claims,” Sunak added. “We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.”



The number of consumers in the UK holding cryptocurrency was estimated to be 2.3 million, according to <a href="https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021" target="_blank" rel="noreferrer noopener">an FCA report</a> published in June.



Though the Advertising Standards Authority (ASA) has been trying to respond to the complaints about misleading crypto promotions, the agency needed support from the FCA given the scale of the problem, according to ​​Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown. The ASA could only censure firms after the ads had been posted, she added.



The <a href="https://www.asa.org.uk/rulings/arsenal-football-club-plc-a21-1121873-arsenal-football-club-plc.html" target="_blank" rel="noreferrer noopener">ASA censured Arsenal Football Club</a> last month for promoting tokens to fans without proper warnings. The watchdog told the organization to ensure its future ads “did not trivialise investment in crypotassets” and make “sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated.”



The UK rule changes will come through legislation to amend the Financial Promotion Order, which sets out the investments and activities to which the financial promotion regime applies, according to the government’s announcement.



<blockquote class="wp-block-quote">“Once this new legislation is passed, firms promoting crypto products will have a much higher bar to jump to show that ads are fair, clear and not misleading and companies could face hefty fines for serious breaches,” Streeter explained in an email. </blockquote>



The UK government’s plans follow <a href="https://www.cnmv.es/portal/verDoc.axd?t=%7B1cbaf61c-57c2-4830-bd6a-071f806795e2%7D" target="_blank" rel="noreferrer noopener">rules outlined by Spain’s national securities market commission</a> on Monday. The agency establishes that the advertising of cryptoassets must include “clear, balanced, fair and non-misleading content and information on the risks in a prominent manner,” among other measures.



The Monetary Authority of Singapore (MAS) also <a href="https://cms.blockworks.co/singapore-issues-guidelines-targetting-crypto-promotions-to-general-public/" target="_blank" rel="noreferrer noopener">released guidelines Monday</a> urging that digital payment tokens providers should not downplay the risks of crypto trading. Regulated providers, including banks and financial institutions, are now barred from promoting their crypto services to the public through any means except through their own websites, social media accounts or mobile applications.



In the US, <a href="https://cms.blockworks.co/voyager-estimated-quarterly-revenue-doubles-despite-lawsuit/" target="_blank" rel="noreferrer noopener">a complaint filed against Voyager Digital</a> last month alleges that the firm is “targeting unsophisticated investors with false and misleading promises of reaping large profits in the cryptocurrency market.” A Voyager spokesperson called the action “absolutely spurious and without any merit.”



“The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra cheap money,” Streeter said. “As speculation swirls about how rapidly central banks will tighten mass bond buying programmes and start raising interest rates, given soaring inflation, they are likely to stay volatile.”



The price of bitcoin was about 41,600, as of 11:30 a.m. ET, according to CoinGecko — down nearly 40% from its all-time high of more than $68,000 in November. 




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