Britain has announced that it would legislate to implement its first set of rules to regulate the crypto sector. The rules would require market participants to be authorised before they can offer services to consumers.

The finance ministry in Britain said it would move ahead as proposed in an earlier public consultation, requiring firms undertaking cryptoasset activities to be authorised by the Financial Conduct Authority. The European Union has already approved the world's first set of comprehensive rules for cryptoasset markets, which are already attracting crypto firms to set up base in the bloc. In response to calls for further clarity on timelines and to accelerate the overall implementation programme, the government's aim is for phase two secondary legislation to be laid in 2024.

The rules focus on cryptoassets, such as Bitcoin, and the underlying distributed ledger technology (DLT) or blockchain that underpins the sector. According to the officials from the ministry, the government’s proposed measures have been informed by recent market events, including the failure of FTX, which reinforce the case for effective regulation and sector engagement. Furthermore, the official announcement states that Britain remains committed to creating a regulatory environment in which firms can innovate while maintaining financial stability so that people can use new technologies both reliably and safely.

The UK announcement comes at a time of reviving fortunes for the crypto sector after Bitcoin, the largest cryptocurrency by circulation, lost much of its value amid the FTX and other scandals over the past year. Recent developments in Britain and the UK In October 2023, Cryptocurrency exchange, Binance, stopped accepting new clients in the UK following a regulatory decision that halted its marketing efforts in the country. The decision was publicly announced less than an hour before its implementation on 16 October 2023 as a result of the Financial Conduct Authority (FCA) blocking Binance's efforts to adapt to the new industry standards.

These standards, which became effective earlier in October were among the most stringent in the world, reflecting the FCA's intent to bolster consumer protection in the wake of the previous year's digital asset price decline. In June 2023, British banks aimed to share more data on economic crime suspicions to combat dirty money inflows into the country. Several banks were in discussions with British law enforcement and government agencies to establish two pilot programmes aimed at sharing intelligence on significant financial crimes like money laundering and terrorism financing.

These efforts come as Britain intensifies its actions against economic crime, which politicians estimate costs the economy approximately GBP 350 billion annually. .