United Kingdom prepares for new rules on bitcoin and ‘unique applications’

Last Updated: 2 February 2023

Governments worldwide are struggling with rules around bitcoin and cryptocurrency. This is also the case in the UK. The Treasury is coming up with plans for the industry around bitcoin. Think regular banks or payment processors, but brokers, crypto exchanges and others are also affected.

The European Union is working on its own framework. But since the Brexit, Britain is making more of their own rules again. That includes guidelines and laws around bitcoin. A completely different policy from the rest of the (Western) world is not obvious. However, London has been the centre of (international) trade and currency for centuries. The capital hopes to play an important role in a new financial world too.

Rules and guidelines are also accompanied by more responsibilities for companies that want to be active in the industry. Consider approval and data sharing. The latter applies to own money flows, but certainly also to customer data. If asked, one must be able to submit the right information to local authorities.

In practice, it is an extension of the Financial Services and Markets Act 2000. The existing legal framework has to be shaken up, things are being adjusted and added.

One problem for governments is the fact that bitcoin and cryptocurrency are basically borderless. With local rules, you don’t stop international parties. They are far from meeting the guidelines that UK companies do have to meet. We saw an example of this in the Netherlands recently. The exchange Coinbase has been providing services in the Netherlands for years, but has only recently been officially included in the crypto register. The regulators of De Nederlandsche Bank (DNB) therefore handed out a multi-million fine to Coinbase.

Applications for approval must include things such as a business plan, elaboration of services and explanation of risk management. This includes not only buyers and sellers, but also banks (parties that want to store bitcoin, for example). It also discusses bitcoin mining and the possible consequence for ‘climate guidelines’.

Currently, they are in a consultation phase. The deadline is currently 30 April 2023. After processing the feedback and reactions, the finance ministry will come up with more clarity.

  • Ivan Brightly

    Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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