UK Government Crypto Activity – 2023 review

12 Jan 2024

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UK Government Crypto Activity – 2023 review Related image

Here at Charlton Baker, we endeavour to stay abreast of the market conditions and remain current while the ground moves beneath our feet. New coins, tokens and chains emerge daily, each with their own USP, often improving on existing leading products. Staying current in the crypto space is a tough gig but with a dedicated team and regular discussions with clients, we can understand the space and keep our finger on the pulse of the market to best serve our clients. With that said, we can start 2024 with a review of the key government outputs of last year. 

The government announced plans to regulate crypto and we have seen the start of this as Coinbase, Binance and Kraken exchanges have requested more information of existing clients. The most recent changes have been the questionnaires to ensure clients understand the risks associated with crypto. Judging by the recent market changes it appears that there is a risk of becoming wealthy if you hold Bitcoin (BTC) or Ethereum (ETH) ! 

2023 has produced some interesting reading for followers of the crypto environment. An environment that doesn’t stand still for a moment. The UK government produced three output documents after a long period of consultation and review, in which the results have formed their view on stablecoins and failures of crypto.   

The three documents are summarised below together with links to the source docs for the full content: 


The UK government has provided an update on its legislative approach for bringing fiat-backed stablecoins into the UK’s regulatory perimeter for financial services. Their document provides additional detail following the UK regulatory approach to cryptoassets, stablecoins, and distributed ledger technology in a financial market's consultation response published in April 2022. The government intends to define fiat-backed stablecoins in legislation, expecting it to capture those stablecoins which seek to maintain a stable value by reference to a fiat currency, and hold (in part or wholly) currency as ‘backing’. The update will inform development of the Financial Conduct Authority and Bank of England’s approaches for regulating stablecoin issuers and custodians, and systemic digital settlement asset payments systems and service providers respectively. 



The document “Managing the failure of systemic DSA (including stablecoin) firms” provides guidance on how to manage the failure of systemic digital settlement asset (DSA) firms, including stablecoin firms. The document outlines the UK government’s approach to managing the failure of such firms, which includes the use of special resolution regimes (SRRs) and the Bank of England’s (BoE) role in managing the resolution process. The document also discusses the BoE’s powers to intervene in the event of a DSA firm’s failure, and the role of the Financial Conduct Authority (FCA) in ensuring that firms are adequately prepared for such an event. The guidance is intended to help firms understand their obligations and responsibilities in the event of a failure, and to ensure that they are able to manage the risks associated with operating in the DSA market. 



The document “Future financial services regulatory regime for cryptoassets” is a consultation paper that sets out proposals for the UK’s financial services regime for cryptoassets and marks the next phase of the government’s approach to regulating cryptoassets. The proposals seek to establish a proportionate, clear regulatory framework which enables firms to innovate at pace, while maintaining financial stability and clear regulatory standards. The document builds on previous HM Treasury proposals, which focused on stablecoins and the financial promotion of cryptoassets. The proposals seek to place the UK’s financial services sector at the forefront of cryptoasset technology and innovation and create the conditions for cryptoasset service providers to operate and grow in the UK, whilst managing potential consumer and stability risks. 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. 


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