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J Huang and S Pettigrove

Yes, Minister! UK clarifies crypto regulatory roadmap

Updated: Dec 1


The UK Economic Secrerary Tullip Saddiq has confirmed that the UK Government under Labour plans to continue industry supporting policy reforms in relation to crypto-assets and digital markets initiated under the Conservative Government with a draft regulatory framework slated for release next year.


If we are to maintain the UK’s position as a leading financial services hub, we need to lean in to the emerging and disruptive technologies that could change our industry dramatically in the coming years.

Saddiq outlined an ambitious agenda for the UK which includes:


  • making the UK a global hub for securities tokenisation;

  • taking forward financial market infrastructure sandboxes through the Digital Securities Sandbox;

  • a pilot issuance of Digital Gilts or DIGIT within the sandbox;

  • creating new regulated activities definitions for cryptoassets, such as operating a cryptoasset trading platform, as well as associated regimes for both admissions to trading and market abuse;

  • new regulated activities for stablecoin, which will be implemented to the same timetable as the rest of the regulatory regime for cryptoassets; and

  • clarifying legal treatment of staking as not falling within the scope of a collective investment scheme.


With refreshing clarity, the Minister observed that crypto-assets have both proven the use case for blockchain technology and are here to stay. In a call to action, Saddiq observed:

If we are going to truly unlock the best of what tokenisation, blockchain technology, and cryptoassets have to offer in the UK, then we need to tie the threads together properly. That means recognising and facilitating the opportunities for traditional markets and cryptoassets to succeed to their mutual benefit. It also means ensuring a coherent joined-up approach across UK authorities, so that firms have the certainty to invest and grow, as well as the space and flexibility to innovate.

FCA Crypto Roadmap


Meanwhile, this week, the UK’s Financial Conduct Authority (FCA) released its Crypto Roadmap setting out its plans for the development of the nation's crypto-assets regulatory regime.



The roadmap outlines a wave of discussion papers and consultations over the next 18 months with a view to full go live on the UK's comprehensive crypto-assets regime in 2026. This kind of end promise date is something many other countries, including the US and Australia, have been sorely missing as industry seeks clarity and certainty to encourage investment and give users safe and regulated opportunities to purchase digital assets.


Money Laundering, financial promotions and stablecoin regulations:




Token admissions and disclosures, market abuse and intermediaries


The next destination on the FCA’s roadmap is two discussion papers scheduled in Q4 2024 and Q1/Q2 2025 respectively. The first will cover:


  1. Admissions and disclosures. This includes admission/rejection processes for token listings, disclosure liability, due diligence, and the National Storage Mechanism (NSM). Matthew Long, Director of Payments and Digital Assets at the FCA, said:

Admissions and disclosures are a crucial aspect of the new crypto regime we’re proposing... It’s an area that’s fundamental to investor protection as it allows people to make informed financial decisions.
  1. Market abuse, including systems and controls, information sharing, and inside information disclosure. According to Matthew Long,

Market abuse can manifest in crypto markets in novel and distinct ways, giving rise to new challenges... we want to achieve the same outcomes wherever possible when it comes to a crypto version of market abuse regulation

The second paper will address trading platforms and intermediaries, including:


  1. Trading platform rules including location, access, matching and transparency requirements

  2. Intermediation rules including order handling and execution requirements

  3. Lending rules including ownership, access and disclosures

  4. Staking including ownership and disclosures

  5. Prudential considerations for cryptoasset exposures


These discussion papers will build on a series of recent roundtables with over 100 stakeholders — including crypto exchanges, banks, trading firms, law firms, academics and regulators.


Further consultations - stablecoins, custody, prudential and beyond


In Q1/Q2 2025, building on previous discussions, the FCA is also moving ahead with consultation papers on:


  • Stablecoins including backing assets and redemption

  • Custody including recordkeeping, reconciliations, segregation of assets, and use of 3rd parties

  • Prudential including the introduction of a new prudential sourcebook, including capital, liquidity and risk management


It is anticipated that the FCA will publish all policy statements (i.e. final rules) by 2026 and start to get ready for the application of the full regime. This timeline is nevertheless subject to change according to parliamentary timeline and government priorities.


With these latest Government and regulatory pronouncements, the UK looks set to challenge Europe and the United States as a hub for digital finance in the 21st century. The Government's decision to provide clear policy direction backed by a regulatory roadmap is likely to give significant confidence to innovators looking to build businesses in the UK. The Government's clear-eyed focus on both digital markets and crypto-assets while working in tandem with its lead regulator is also likely to give significant encouragement to the UK blockchain industry.

 

Written by Steven Pettigrove, Jake Huang, Matt Norton with Michael Bacina


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