To keep pace with the latest advanced technologies, governments should be willing to continually change and upgrade their rules and regulations, especially in the highly complex blockchain arena. Blockchain technology and cryptocurrencies have transformed from niche topics into mainstream mechanisms, and governments should be involved in it to create some sort of order. As the cryptocurrency arena is notorious for money laundering, terrorism-based activities, and illegal trades, governments try to tackle these issues by building advanced regulatory frameworks.
In the UK, the Financial Conduct Authority (FCA) is the main regulatory body of cryptocurrency and blockchain technology. It has complex and sophisticated regulatory guidelines for the users, which are constantly changing and evolving. Under the previous government, crypto and blockchain technology were welcomed by the authorities, however, the limited space and delayed updation of rules restricted the scope for web3 innovations.
As the new parliament opened in July 2024, we can expect a faster implementation of updated crypto-based laws. The FCA published a roadmap for financial regulations on Tuesday, in which the government is planning to collaborate with the private sector to update the frameworks. The final act of the roadmap is expected to be implemented in early 2026.
What’s Expected? A Simple Guide to FCA’s Crypto Roadmap
The financial authority of the UK aims to create a discussion among the public about crypto, which is why its roadmap is mainly occupied with discussion papers, consultation papers, and policy statements. This will help the FCA to obtain feedback on proposals and projects. Let’s dig deeper.
2024 Roadmap
The final months of this year will witness the study of discussion papers on the issuance and custody of stablecoins. This is the continuation of the previous government’s plans to regulate them. As major crypto hubs, the uncertainty and lack of clarity regarding the stablecoin frameworks of the U.S. and UK will push global institutions to opt for other geographical areas. This is an important thing to consider and a framework for this should be live as soon as possible.
Categorized into “market abuse” and “admission and disclosures”, the discussion papers include admission/rejection papers, disclosures, liability, due diligence, National Storage Mechanism (NSM), systems and controls, information sharing, and inside information disclosure. FCA revealed the roadmap to the public, seeking feedback and the content they are expected to cover.
2025 Roadmap
The Q1 and Q2 focus on building consultation papers on backing assets and the redemption procedures regarding the stablecoins. Also, it will discuss additional requirements related to custody such as recordkeeping, reconciliations, segregation of assets, and the use of 3rd parties. Also, it will try to create a new prudential sourcebook addressing capital, liquidity, and risk management.
The major topics in discussion to obtain new proposals include the functioning of trading platforms and the criteria regarding lending. The issuance of licenses for exchanges will possibly consider location, accessibility, matching, and transparency requirements. The discussion papers also include the creation of frameworks on staking, including ownership and disclosures.
The Q3 and Q4 of 2025 are mainly focused on implementing regulations on market abuse based on the insights from previous discussion papers. These quarters will also witness the monitoring of all RAO (Regulated Activities Order) activities. Also, they will create consultation papers on governance including Senior Managers and Certification Regime (SMCR)
2026 Roadmap
The early 2026 will see the publication and implementation of all the newly formed rules and regulations. Apart from publishing the policy statements, FCA will continue to create more consultation papers. The remaining material for the prudential sourcebook will also be added. Suggestions from the public will be taken into account, as usual, before implementing the rules.
Important Criticisms of the UK’s Crypto Regulations
According to various crypto experts, any forms of regulations outside the crypto community are unnecessary. The act of determining rules by the outsiders who don’t participate in the inside voting is ridiculous. This approach is too restrictive and authoritative, discouraging innovations.
Various others have serious privacy concerns. The monitoring of all the activities by the government itself is against the foundational anonymity principles of blockchain technology. The technical language and the lack of clarity of the roadmap also created ambiguity among the crypto community. Also, it is unclear how the decentralized platforms will disclose the data to the government.
Final Thoughts
Despite the criticisms, a large number of UK citizens consider the implementation of crypto-based rules as a mandatory phase for a sustainable economy. It will also limit fraudulent activities and create a safe infrastructure for users.
The complete implementation of rules is expected to conclude by Q2 of 2025, and then we will see what will happen on an experiential basis. Let’s wait for the best. Do browse our website for more articles regarding the crypto regulatory affairs of the UK government.