1. HM Treasury speech on approach to cryptoasset and stablecoin regulation
On 25 November 2024, HM Treasury published a speech given on 21 November 2024 by Tulip Siddiq, the then Economic Secretary to the Treasury, on the UK government's approach towards the regulation of cryptoassets and stablecoins.
With a few exceptions for stablecoins, HM Treasury plans to fully implement its proposals set out in October 2023 for the regulation of cryptoassets in the UK. This includes introducing new regulated activities such as operating a cryptoasset trading platform, along with frameworks for trading admissions and market abuse. There will be a suite of FSMA-inspired conduct rules for operating trading platforms, trading activity, and lending and staking cryptoassets. Additionally, HMT committed to clarify that cryptoasset staking services do not constitute a collective investment scheme under financial services law, addressing legal uncertainties (see section 4 below).
Regarding stablecoins, HMT will move forward with its October 2023 proposals to introduce new regulated activities for stablecoin issuance in the UK, including safeguarding requirements similar to those for other cryptoassets. The regulated activity for stablecoin issuance will ensure that the Financial Conduct Authority can properly manage stablecoin specific risks, most notably those associated with redemption and the management of the backing assets. However, it has decided not to extend UK payments regulation to stablecoins at this time, believing that doing so would impose disproportionate regulatory burdens on certain stablecoin activities. This latter decision provides some helpful short-term clarity to stablecoin issuers and service providers. It does however raise questions about how, and if, stablecoin transfers will be regulated in the long run.
2. FCA crypto policy roadmap and cryptoasset consumer research
Following the HMT's speech, on 26 November 2024, the FCA published a crypto roadmap setting out its proposed policy publications for cryptoassets and their anticipated content.
The roadmap outlines a provisional schedule for releasing discussion papers, consultation papers, and policy statements on the regulation of stablecoins and cryptoassets, following the government's outlined approach. It aims to set a unified timeline for establishing new regulated activities for stablecoins and a new regulatory framework for cryptoassets.
The FCA expects to publish all policy statements and final rules by the end of 2026, with the cryptoasset regulatory regime to be implemented thereafter. However, the roadmap's timelines are flexible and may change based on parliamentary scheduling and further guidance from the government.
3. FCA discussion paper on admissions, disclosures and market abuse regime for cryptoassets
Following the announcement from HMT to introduce frameworks for cryptoasset trading admissions, disclosures, and market abuse, on 16 December 2024 the FCA published a discussion paper (DP24/4) setting out its proposed approach.
DP24/4 aims to assist the FCA in establishing a balanced cryptoasset regulatory framework that mitigates market risks while encouraging growth. The key objectives include enhancing regulatory clarity, ensuring consumer information availability, mandating fair and orderly trading conditions, and minimising money laundering and fraud risks. The document outlines proposals for a cryptoasset Admission and Disclosure (A&D) regime, drawing on the IOSCO recommendations and considering the unique attributes of cryptoassets. It also proposes a market abuse regulation framework (MARC) for cryptoassets, covering misconduct such as insider dealing and market manipulation, and inspired by the UK Market Abuse Regulation.
Click here to read our insights on the discussion paper
4. Legislation on cryptoasset staking services published
On 9 January 2025, the Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17) (Order) was published. As trailed in HMT's speech in November 2024, the legislation aims to clarify that qualifying cryptoasset staking arrangements do not amount to collective investment schemes under the Financial Services and Markets Act 2000 (FSMA). It amends the Collective Investment Schemes Order 2001 to explicitly exclude cryptoasset staking from the definition of collective investment schemes.
This legislation applies throughout the United Kingdom and is intended to provide clarity for firms offering staking services to UK customers, ensuring they are not subject to collective investment scheme regulations. The government recognises that existing rules may not be appropriate for staking arrangements and believes that consumer protection should be provided through financial promotion and relevant FCA rules.
Previously, there was uncertainty about whether staking arrangements could be classified as collective investment schemes. This amendment addresses that uncertainty to encourage cryptoasset activity in the UK without the regulatory barriers posed by the collective investment scheme framework. The legislation will come into force on 31 January 2025.
The order should provide some relief for businesses taking part in staking. It's nonetheless advisable to check whether your activities fall within the exclusion.
5. Next steps – stablecoin consultations
An important next step is the hotly anticipated set of consultations on the regulation of stablecoins. The FCA's roadmap pencils them in for Q1/Q2, almost a year and a half after the FCA's and Bank of England's stablecoin discussion papers of November 2023. With stablecoins playing a key role in cryptoasset markets, these papers will set the tone for the UK's approach to cryptoasset regulation.
