UK & EU Regulation Divergence Post-Brexit

How is the EU approaching crypto-asset regulation?

The EU is negotiating a new form of regulation on markets in crypto-assets known as MiCAR, which is often described as MiFID for crypto-assets. It includes restrictions on crypto-asset issuance, authorisation approvals for crypto-asset service providers from member states, organisational requirements, prudential safeguards and conduct of business requirements. It also envisages a market abuse regime. As none of this had been decided or agreed at the end of the Brexit transition period, it was not onshored. 

How is the UK approaching crypto-asset regulation?

The UK is taking cues from international bodies in what it has described as a ‘staged and appropriate’ approach to regulating crypto-assets. 

Regarding stablecoins, the UK has sought to reflect recommendations from the FSB and IOSCO. Stablecoins that are used as a means of payment will be regulated as a form of electronic money and regulated by the FCA and systemically important stable coins will be regulated by the Bank of England. 

The UK has also stated that it is waiting for the Basel Committee to propose an internationally-agreed position on how crypto-assets should be treated for prudential purposes. 

The UK has also said it plans on implementing FATF’s recommendation on imposing a travel rule on crypto-asset transfers. Meaning information on the originator and beneficiary will accompany transfers of crypto-assets.