After a volatile year in the crypto space, members of the House of Lords advocated for more regulation of crypto assets. The move was in response to the Financial Services and Markets Bill (FSMB), which brings some aspects of cryptocurrency under financial regulation.
Alan Smith, a member of the UK’s House of Lords and one of the voices advocating for increased crypto regulation, claimed that the recent collapse of FTX has proven the market’s volatility and susceptibility to fraud. He compared cryptocurrencies to online gambling sites.
Further insights on the FSMB
The FSMB gives UK regulators, such as the Financial Conduct Authority, broader authority to oversee crypto assets. Additionally, the measure governs stablecoins used for payments and places limitations on promoting cryptocurrencies to UK residents.
The upper house legislators had the chance to voice their concerns and propose amendments during the second reading session on Tuesday night.
An upper chamber member named Jonathan Hill stated that the constant evolution of digital assets constitutes not just a financial revolution but also a technological and conceptual revolution that will not easily fit into existing regulatory categories and procedures; hence a completely different regulatory strategy will be required for cryptocurrencies.
He continued by saying that the regulators will encounter some complicated structural and capacity issues in managing innovation, and he doubts if the FCA is genuinely prepared for this.
George Bridges and other Lords members also raised concerns about the regulators’ lack of adequate accountability frameworks.
Andrew Griffith, the Treasury Minister, revealed to the House of Commons that he plans to create a framework for digital assets and stablecoins “that support growth and innovation” in 2023, even though he implied that no new legislation is expected to be introduced this year.
Griffith further revealed that in the coming weeks, the UK government would release a consultation report on the crypto regulations, and the consultations will highlight provisions for decentralized finance (DeFi).