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Photo by Arnold Nagy: https://www.pexels.com/photo/big-ben-london-during-night-time-11567961/

UK financial services and markets bill gets second reading

Chancellor Nadhim Zahawi introduced the Financial Services and Markets Bill, which outlines changes within the industry to create an open, innovative, and technologically advanced sector.

Since Brexit, the UK has operated under EU laws, but the bill could set Britain apart, give it a competitive edge, and better serve consumers and businesses.

The bill:

  • Implement the outcomes of the Future Regulatory Framework (FRF) Review
  • Look to maintain the UK’s position as an open and global financial hub
  • Harness the opportunities of innovative technologies in financial services
  • Bolster the competitiveness of UK markets and promote the effective use of capital
  • Support the leveling up agenda, promote financial inclusion and consumer protection
  • Reform the 1974 Consumer Credit Act
  • Regulate cryptocurrency and stablecoins

Consistency

The move aims to create consistency among financial institutions and improve market discipline through increased powers given to supervisory authorities.

The press release from the CEO of Innovate Finance, Janine Hirt, takes a positive attitude toward the bill

“Despite some UK political volatility, we have seen continued progress with significant policy wins, including some in recent days. Government proposals for a Financial Services and Markets Bill will introduce two important measures we have advocated: a competitiveness objective for regulators and enabling powers to bring crypto-assets and stablecoins into their remit.”

The regulatory reforms are featured in Innovate Finance’s recent manifesto for a post-Brexit regulatory regime for innovation. These issues are constantly being discussed among their members, regulators, and policymakers.

Stablecoins 

As part of the legislation changes, stablecoins, which are viewed as a bridge between the traditional market and cryptocurrency, will be regulated. The document defines critical digital assets, allowing a range of technologies such as stablecoins to become regulated.

As a result of the bill, stablecoin issuers that use stablecoins to make payments will need to obtain a license from the Financial Conduct Authority (FCA). Anti-money laundering rules apply to some crypto businesses, but this Bill enhances them.

Related:

Europa

According to Europa, stablecoins play an essential role in the crypto-asset ecosystem, although it does pose risks to market liquidity if they fail. Stablecoin transactions and redemption terms and conditions fail to meet the requirements for real-world payments as far as speed and cost are concerned. Thus, this legislation may be critical for responsible innovation and financial stability. 

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Timo Lehes, Co-founder at Swarm

Timo Lehes, Co-founder at Swarm, explains this element of the bill: “Stablecoins form a crucial part of the DeFi and broader crypto infrastructure because they give users interoperability with TradFi. As such, bringing them within the remit of existing regulatory oversight is the simplest and most intelligent solution, which is cause for celebration.

“The fear with crypto regulation in many regions has been and continues to be that authorities will take an overly-pessimistic and heavy-handed approach, creating excessive red tape where none is required. The UK seems to be getting that balance right, but others, unfortunately, have not. “

The bill is in its second reading. 

  • Helen Femi Williams is a freelance journalist and podcaster interested in fintech, politics, economics, and their intersections. She is the host of the letsgetlitical podcast, a fortnightly show interviewing guests from all different sides of the political spectrum, in partnership with the Mozilla Foundation. Prior to this role, she worked as an innovation consultant developing insurtech and fintech products and ideas for brands, startups, and major corporations. She studied International Relations at the University of Nottingham (UK and Malaysia).

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