UK Crypto Regulations: Key Changes on the Horizon for 2024

UK crypto markets have been on an upswing for a while now. Partly, this is due to the global changes in the crypto market and a wider move towards crypto acceptance. On the other hand, the UK’s regulation policy is very conducive to crypto growth.

With the rise of interest in crypto, the UK government and its regulatory agencies are looking for ways to bring in new regulations and get a tighter grip on the industry. This is part of a wider trend, and it has both upsides and downsides. In this article, we’ll go over some of the potential changes in the crypto regulations that UK investors may face.

Crypto Investments on the Rise

Cryptocurrencies, in general, and the crypto trade have been experiencing one of the biggest booms since they were first introduced to the public. Crypto exchanges in the UK and those abroad are trading at a volume higher than ever, and the value is steadily increasing, at least in the long run.

The main reason behind this is the change in public attitude towards crypto. Traditional businesses and financial institutions are accepting the use of crypto, and small-time investors aren’t hesitant to use them and keep them as a part of their broader investment portfolio.

Limited Regulations

At this point, the use and trading of crypto in the UK aren’t regulated nearly as much as they are in other markets. This is one of the reasons users are attracted to crypto as an asset, along with its technical features and benefits.

Financial Services and Markets Act 2000 (FSMA) is still the most comprehensive UK law that regulates the use of crypto now that the EU regulations don’t apply in Britain. FCA is the regulatory body that deals with the issue, and that may suggest further regulations.

MiCA

At the same time, the EU has come up with its own regulations regarding crypto. MiCA stands for Markets in Crypto-Assets (MiCA). It’s a comprehensive framework of regulations that are applied throughout the EU, and that covers mining, holding, selling, and trading crypto assets.

It’s the most complex piece of regulation, and many have claimed that the countries that currently don’t regulate crypto directly, such as the EU and the US, will start using MiCA as a template and model. The UK left the EU before MiCA was introduced, and many UK crypto enthusiasts claim that this is the perfect time to position the country as more crypto-friendly.

DP23/4

The UK is moving on with a national regulation plan created and monitored by the proper regulatory agencies. They’ve come up with a plan called DP23/4, which has been released to the public and details the proposed regulations.

The plan is supposed to be very comprehensive and cover fiat-backed and fully decentralized cryptos, but it also includes rules on how and when cryptocurrencies can be marketed on social media as a way to combat scams. It has also been updated to include a new agenda for 2025.

Standing behind Stablecoins

One of the most prominent features of the new regulations is its support for stablecoins. The government has recognized their potential for widespread adoption, including facilitating trading, lending, and borrowing of crypto assets. It’s easier for the regulatory bodies to take this stance, as the value of stablecoins is tied to that of fiat money.

Stablecoins provide both the technical features of crypto and the financial stability of fiat money. For this reason, they are disliked by those who like the libertarian side of crypto but are liked by governments and regulators.

Approach to Decentralization

On the other hand, decentralization, a feature that’s among the most important for crypto product users, raises concerns for the government, as is noted in the DP23/24 paper. Decentralized platforms put the burden of crypto security on end users, for the most part. The regulators find this to be a risky approach.

As more users accept crypto and start using it on a daily basis to both hold assets and invest, the risk of scams will loom larger. There will, therefore, be a tension between a sense of security and independence that comes with more decentralization.

Dealing With Crypto Influencer

The UK crypto plans include dealing with promoting crypto on social media and especially with crypto influencers offering fraudulent and risky advice. This has become an industry of its own since it was clear that there is money to be made in crypto trading.

The proposed UK regulations deal with the influencers much more harshly and set up guidelines that they’ll have to follow. This has also faced criticism as it infringes on free speech and will have negative effects on the marketing industry around crypto. However, many crypto businesses are open to creating more accountability in this area.

Uncertainty

 The crypto business community and experts in the field have had divided opinions about the UK’s new regulation plans. These come from both directions –some feel that the new regulations are too harsh, and others that they should be more similar to those in the EU.

However, everyone agrees that introducing new crypto regulation is better than the uncertainty that comes with the current lack of rules. Even poor policy that the companies can follow, understand, and adhere to is better than having no policy at all. This is especially true for the investment side of things, which profits from long-term planning.

Conclusion

 In conclusion, the UK’s approach to crypto regulations is still evolving, with a focus on balancing innovation and security. While some see the new rules as too strict, others believe they don’t go far enough compared to the EU’s MiCA framework. Stablecoins and decentralized platforms are key points of discussion, as the government seeks to protect users while allowing for growth.

Regardless of differing opinions, having clear regulations is seen as a positive step. In the long run, these guidelines will help shape the future of the UK’s crypto market, providing more certainty for investors and businesses alike.