Following the Treasury’s confirmation that it intends to introduce a new “regulatory gateway” for authorized firms approving financial promotions, the FCA has launched a consultation on proposals to operationalize this new gateway. Complementing a wider program of reform to the financial promotions regime, the proposals will affect both authorized firms approving financial promotions as well as unauthorized firms communicating approved financial promotions.
In October 2022, the Council of the EU published the long-awaited compromise text of the proposed Regulation on Markets in Cryptoassets (MiCA), a “landmark regulation” that, according to the Council, will “put an end to the crypto wild west”. Once in force, MiCA will establish the first comprehensive, pan-EU regulatory regime for the regulation of cryptoassets, including the regulation of (i) cryptoassets issuance activities and (ii) cryptoasset service providers (who will be held to similar regulatory standards to those imposed on investment firms).
On 27 July 2022, the FCA published its highly anticipated final rules and guidance on the new Consumer Duty, ushering in a fundamental cultural shift in the way that regulated firms will approach and serve customers, and starting the countdown clock for implementation plans across the industry.
On 20 June 2022, HM Treasury issued much-anticipated details on the forthcoming UK buy-now-pay-later (BNPL) regulatory regime. The Treasury’s approach to regulatory controls for agreements is essentially the same position that it took in its October 2021 consultation – a proportionate approach applying some but not all of the consumer credit regulatory principles, with regulations tailored to apply to BNPL as a bespoke product.
On 15 June 2022 HM Treasury published the outcome to its consultation on amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). The changes to the MLRs will be implemented through the Money Laundering and Terrorist Financing (Amendment) (No.2) Regulations 2022 Statutory Instrument. A draft of the Statutory Instrument and explanatory memorandum have also been published. The amendments bring the MLRs in line with updated FATF standards and fill gaps in the current operation of the UK’s AML regime, most significantly in relation to cryptoassets.
Mirroring earlier proposals by the European Commission, in a move anticipated by the industry, HM Treasury has confirmed that it will implement a regime whereby third-party firms designated as “critical” will be subject to direct regulatory oversight by the financial regulators. The Treasury published a policy statement on 8 June 2022, setting out its framework for mitigating the risks caused by financial services firms outsourcing important functions to third-party service providers.
At UK FinTech Week 2022 in April, the Treasury announced a host of new and forthcoming initiatives to build on the UK’s “FinTech success stories” and support its push to become the loading global hub for crypto businesses. The initiatives range from incubators (like the Financial Market Infrastructure Sandbox and the FCA’s CryptoSprint events), to industry engagement partnerships through a Cryptoasset Engagement Group, to reviews of the tax treatment of crypto and the legal status of Decentralised Autonomous Organisations. Most significant among the announcements is the Treasury’s confirmation that it will bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory perimeter.
This edition of Bite-size Briefings explores the regulation of crypto (or digital) assets across a number of jurisdictions: Australia, Brazil, Hong Kong SAR, Singapore, the UK and the US.
On 18 January 2022, HM Treasury confirmed that it will bring certain cryptoassets into the scope of the financial promotion regime. The Treasury’s view is that the evidence of risks to consumers provides a strong case for intervention, and as such it intends to expand the scope of the Financial Promotions Order to include cryptoassets. The Treasury’s announcement was followed the next day by the launch of an FCA consultation on strengthening the financial promotion rules for high-risk investments, including cryptoassets.
Regulators and policymakers have left emergency measures behind and returned to their reform agendas. In this piece, Baker McKenzie regulatory experts set out the top ten UK developments for financial institutions and fintechs to watch in 2022 covering: good culture, Consumer Duty, BNPL regulation, crypto regulation, AML regulation, appointed representatives regime, financial promotions gateway, operational resilience, ESG regulation, divergence, Future Regulatory Framework Review.