Following a session of the House of Lords (the Parliament’s upper house), the UK’s Economic Crime and Corporate Transparency Bill passed its third reading, and if officially adopted, the law will give the government the power to confiscate crypto if they are linked to any kind of financial wrongdoing.
In a related development, the UK’s Financial Conduct Authority (FCI) cautioned domestic businesses who are selling cryptocurrencies to British customers that they must adhere to a specified promotion policy.
The House of Lords, as said on Twitter, made “small changes to ensure the bill is effective.” In an effort to curb financial crime and provide people with protection, the legislation was first submitted in 2022.
With the passage of the Economic Crime and Corporate Transparency Bill, the British government would also be given the authority to seize digital currency used to finance illegal acts like terrorism.
The government has previously claimed that digital currency is “an attractive technological enabler for criminal activity.” Additionally, they asserted that the “pseudo-anonymous and international nature” of Bitcoin and the altcoins could make it challenging to identify wrongdoers.
According to the National Assessment Center, illegal cryptocurrency transactions in the UK amounted to about $1.5 billion in 2021 (less than 1% of the entire transaction value). The organization thinks the actual numbers might, however, be substantially higher.
The comprehensive measure, over 340 pages long, was unveiled to make the most of Brexit-related freedoms and give authorities more control over the British financial system. Although a proposal to regulate stablecoins within the nation’s payment regulations was included in the initial bill, revisions to treat all cryptocurrency as a regulated activity and provisions to oversee crypto advertising were introduced later as the bill moved through Parliament.
The measure has now passed the House of Lords and is moving on to “Consideration of Amendments,” where the House of Commons and the House of Lords can consider any amendments and must ultimately come to an agreement.
The “Royal Assent,” or signature of King Charles III, is the last need for legislation to become enacted. It’s important to remember that Queen Anne in 1708 was the last British monarch to reject a statute passed by both legislatures. She refused to sign the Scottish Militia Bill as a “Royal Asset” after being told by her minister that doing so would not be in the king’s best interests.
In addition to potential new regulations, the FCA, the top regulator in Britain, has warned “all firms marketing crypto assets to UK consumers” to abide by the financial promotion regime by October 8, 2023. The agency anticipates that most digital asset companies that provide services to British retail clients would fall under its purview as a result.
After that date, cryptocurrency firms must launch marketing through a licensed individual and make sure their product conforms with FCA anti-money laundering regulations. Failure to register carries a penalty of up to two years in prison, an unlimited fine, or both.
“We will take robust action against persons illegally promoting to UK consumers. This may include but is not limited to placing firms on our warning list requesting takedowns of websites, social media accounts, apps, and all other promotions that are in breach, and enforcement action,” the regulator outlined.
The technology at the center of the debate, end-to-end encryption, is praised for helping to protect private communications. Its significance in safeguarding the privacy of journalists, human rights advocates, and diplomats, among others, cannot be emphasized.
Nevertheless, the most recent legislative initiative from the UK government is making a fuss. The Online Safety Bill, initially drafted in May 2021, will deal with matters pertaining to online safety. These include users’ ability to control the content they interact with, children’s access to pornographic content, and misleading adverts.
“This government will not allow our children’s lives to be put at stake whenever they go online… To prevent any further tragedy and build a better future for our children, we are acting robustly and with urgency to make the Online Safety Bill the global standard for protecting our children,” said Paul Scully, UK Minister for Technology and the Digital Economy.
Apple, WhatsApp, and Signal are just a few companies offering end-to-end encrypted messaging services that have publicly voiced their worries about the UK Online Safety Bill.
Apple, for instance, pleaded with the UK government to change the legal framework to maintain encryption. On the other hand, WhatsApp CEO Will Cathcart reaffirmed that the messaging service would not abandon end-to-end encryption to comply with UK law.
Although social media corporations and messaging services are the primary targets of the UK Online Safety Bill, there may not be as immediate effects on cryptocurrencies like Bitcoin. Still, certain conclusions can be made based on the general outline of the measure.
Data collecting and increased surveillance are just two examples. Additionally, there is regulatory history. If this law is passed as written, it may open the door to additional regulation of the tech sector, including cryptocurrency. Governments throughout the world are debating how to control digital currency. Future regulations pertaining to Bitcoin and other cryptocurrencies may be influenced by the UK’s approach to balancing safety and privacy in the internet industry.