United Kingdom

UK plan on digital securities sandbox laid before Parliament

The regulations will take effect on Jan. 8, with the Bank of England and the U.K. Financial Conduct Authority operating the sandbox.

The United Kingdom Financial Services and Markets Act’s provisions on a digital securities sandbox are scheduled to come into force in January 2024 after being presented to Parliament.

In a Dec. 18 publication, the U.K. government announced the Digital Securities Sandbox (DSS) regulations of the 2023 Financial Services and Markets Act, which were laid before Parliament, paving the way for crypto firms to test products and services in the country. According to the government, the regulations will take effect on Jan. 8, with the Bank of England and the U.K. Financial Conduct Authority operating the sandbox.

“The DSS will allow firms and the regulators to test the use of new technology across our financial markets,” says a memo explaining the bill. “In particular, this will involve trialling the use of developing technology (such as distributed ledger technology, or in general technology that facilitates what are commonly referred to as ‘digital assets’) to perform the activities of a central securities depository (specifically notary, settlement and maintenance), and operating a trading venue.”

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The Pope and US regulators warn about AI risks: Law Decoded

The head of the Catholic Church warned humanity of AI’s potential dangers and explained what needs to be done to control it.

Nowadays, everyone has an opinion on artificial intelligence (AI) and its potential risks. Even Pope Francis — the head of the Catholic Church — warned humanity of AI’s potential dangers and explained what needs to be done to control it. The Pope wants to see an international treaty to regulate AI to ensure it is developed and used ethically. Otherwise, he says, we risk falling into the spiral of a “technological dictatorship.” The threat of AI arises when developers have a “desire for profit or thirst for power” that dominates the wish to exist freely and peacefully, he added. 

The same feeling was expressed by the Financial Stability Oversight Council (FSOC), which is comprised of top financial regulators and chaired by United States Treasury Secretary Janet Yellen. In its annual report, the organization emphasized that AI carries specific risks, such as cybersecurity and model risks. It suggested that companies and regulators enhance their knowledge and capabilities to monitor AI innovation and usage and identify emerging risks. According to the report, specific AI tools are highly technical and complex, posing challenges for institutions to explain or monitor them effectively. The report warns that companies and regulators may overlook biased or inaccurate results without a comprehensive understanding.

Even judges in the United Kingdom are ruminating on the risks of using AI in their work. Four senior judges in the U.K. have issued judicial guidance for AI, which deals with AI’s “responsible use” in courts and tribunals. The guidance points out potentially useful instances of AI usage, primarily in administrative aspects such as summarizing texts, writing presentations and composing emails. However, most of the guidance cautions judges to avoid consuming false information produced through AI searches and summaries and to be vigilant about anything false being produced by AI in their name. Particularly not recommended is the use of AI for legal research and analysis.

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Revolut Business reportedly cuts crypto services ahead of new UK rules

The neobank will halt crypto purchases by businesses while it sorts out new ad requirements.

Neobank Revolut will temporarily halt cryptocurrency purchases on its business platform in the United Kingdom at the beginning of the new year, according to a media report. An email informing customers of the decision mentioned only purchasing, implying holding crypto and selling it could go uninterrupted. 

Revolut said the pause was needed to give it more time to comply with new Financial Conduct Authority (FCA) rules on promoting crypto that come into force on Jan. 8, 2024. Revolut Business will halt crypto purchases on Jan. 3, it said. In a message reproduced in an X (formerly Twitter) post, Revolut Business told customers:

Revolut is the latest of several firms impacted by the FCA rules, which the regulator itself described as “tough.” The rules were announced in June and were intended to bring crypto advertising into line with other high-risk investment products.

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Majority of UK MPs ‘lack crypto knowledge,’ says industry association

According to CryptoUK, MPs Andrew Griffith and Lisa Cameron were among the top crypto proponents in the U.K. government.

The self-regulatory trade association CryptoUK has reported roughly 5% of all members of Parliament (MPs) in the United Kingdom have publicly spoken on crypto and blockchain, suggesting a lack of knowledge.

In a report released on Dec. 14, CryptoUK analyzed the sentiment of MPs between 2022 and 2023, finding that only 37 lawmakers specifically mentioned crypto and blockchain — 5.7% of the 650 members. Some of the top voices in the U.K. government in 2023, according to CryptoUK, included MP and former Economic Secretary Andrew Griffith and crypto proponent Lisa Cameron.

“It’s important that MPs from all parties and from all corners of the UK get to know the cryptoasset industry better,” said a CryptoUK spokesperson. “Almost five million people […] in the UK have some sort of cryptoasset exposure, while tens of thousands of people work in the industry in the UK, supporting their local economies and helping the British economy grow.”

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Crypto in the well and snake villain star in FCA’s pixelated animation

The United Kingdom’s financial regulator has published a pixelated, video game-styled Wild West cartoon to enlighten investors.

The United Kingdom’s financial regulator, the Financial Conduct Authority (FCA), has vigorously promoted its marketing rules for crypto firms since their publication in June. And it’s now found a way to bring them to life as a pixelated Wild West cartoon to enlighten investors. 

A minute-long animation mimicking the style and sound of a video game appeared as an MP4 file on the FCA’s website on Dec. 13. The cartoon isn’t presented as part of a press release but is listed as a standalone — with no caption or explanation around it — on the publications page.

The cartoon explains how to judge whether crypto companies play by the FCA’s marketing rules. Under the rules, crypto promo campaigns are not allowed to propose free gifts or referral bonuses, and they must display a prominent warning about the risk of losing money when investing in crypto.

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AI guidance for judges in England and Wales warns against risks

Senior judges in the U.K. have published AI guidelines for the judiciary to follow, which advise how to use AI and warn of the potential risks of using the technology in trials.

A group of four senior judges in the United Kingdom have issued judicial guidance for artificial intelligence (AI), which deals with the “responsible use” of AI in courts and tribunals. 

The guidance, published on Dec. 12, is directed toward magistrates, tribunal panel members and judges in England and Wales, and it is intended to inform and warn court officials. 

The guidance points out potentially useful instances of AI usage, primarily in administrative aspects such as summarizing texts, writing presentations and composing emails.

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British regulator adds Justin Sun-linked Poloniex to warning list after $100M hack

The Financial Conduct Authority warns that the crypto exchange is operating without proper authorization.

The United Kingdom’s Financial Conduct Authority (FCA) has added crypto exchange Poloniex to its warning list of non-authorized companies. The Seychelles-based exchange is one of the three companies owned by or affiliated with entrepreneur Justin Sun that have suffered four hacks in the last two months.

The warning to Poloniex was published on the FCA’s website on Dec. 6. It doesn’t offer a reason but says that “firms and individuals cannot promote financial services in the UK without the necessary authorization or approval.” The FCA also reminds the public that it can’t count on financial law protection while dealing with unauthorized entities.

In August, the FCA revealed that since 2020, it has received 291 applications from crypto companies seeking registration and has approved only 38. In October, it announced that 140 crypto companies, including HTX and KuCoin, had been included on its warning list. Since then, the regulator has authorized only one entity, PayPal UK.

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Tax services are getting pushy to have crypto declared: Law Decoded, Nov. 27–Dec. 4

Spain and Brazil are chasing cryptocurrency stored abroad, while the U.K. wants taxes paid for crypto assets that weren’t previously declared.

Last week, His Majesty’s Revenue and Customs (HMRC) presented an unpleasant Christmas surprise to hodlers in the United Kingdom, demanding they declare any crypto holdings they failed to report in the last four, six or even 20 years. The disclosure must include “exchange tokens,” such as Bitcoin (BTC), as well as any nonfungible tokens (NFTs) and “utility tokens.”

Less harsh in its demands, the Spanish Tax Administration Agency has also reminded its citizens about their obligations to declare crypto, even if they store it abroad.

Brazil will also proceed to tax its citizens’ foreign crypto holdings via a bill already passed in the Chamber of Deputies and expected to be approved by President Luiz Inácio Lula da Silva. The change makes those funds taxable at the same rate as domestic funds.

The SEC is still digging into Binance.US

The United States Securities and Exchange Commission is still looking for evidence that Binance.US had a backdoor to potentially control customer assets similarly to FTX. Anti-Money Laundering laws as part of a $4.3 billion settlement with the U.S.

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UK House of Commons recommends further CBDC tests on viability, risks

A U.K. parliamentary committee fears an official launch would demand significant investment and that the benefits may not outweigh the risks.

A United Kingdom parliamentary committee in the House of Commons has asked the Bank of England and Treasury to conduct further consultative work to determine the benefits of launching a digital pound.

The groundwork and tests related to the launch of a central bank digital currency (CBDC) incurred significant costs for the Bank of England and Treasury, according to a House of Commons Treasury Committee report. It recommended greater transparency around the expenses incurred around CBDC initiatives by having a separate line item in its annual report and accounts from 2024 onwards:

“It is important that the Bank of England and Treasury keep control of these costs to avoid spending more than necessary on a digital pound that might not proceed to being built.”

The ongoing tests of a British CBDC highlighted numerous benefits concerning issuance, distribution and privacy, among others.

Related: UK House of Lords passes bill to seize stolen crypto

The committee asked England’s central bank to avoid speculating that “a digital pound can fix problems it can’t” and to ensure that a digital pound does not worsen the financial exclusion precedent set by the fiat economy.

While the Bank of England and HM Treasury see the need for a digital pound in the future, committing to build the infrastructure for one requires further preparatory work.

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Crypto payment firm Alchemy Pay adds SEPA deposits in Europe

Alchemy Pay has introduced new deposit options, including the euro Instant solution, SEPA Instant, and the U.K. fast money transfer option, Faster Payments.

Cryptocurrency payment platform Alchemy Pay is scaling its payment options by integrating new on-ramps — new ways to buy crypto — in Europe and the United Kingdom.

Alchemy Pay has introduced new deposit options, including the euro instant solution, Single Euro Payments Area (SEPA) Instant, and the U.K.

Announcing the news on Nov. 29, Alchemy Pay stated that the new payment options aim to simplify purchasing cryptocurrencies like Bitcoin (BTC), enabling transfers to be processed in “seconds to a few minutes.”

With SEPA Instant, European Alchemy Pay customers can buy up to 5,000 euros ($5,460) in cryptocurrency, while Faster Payments has a transfer limit of up to 5,000 British pounds ($6,320).

Europe’s SEPA Instant payments and Faster Payments in the U.K.

“This move further amplifies Alchemy Pay’s payment network throughout Europe, surpassing emerging markets and broadening its influence,” the announcement states.

Related: SoFi Technologies to cease crypto services by Dec. 19

According to the announcement, Alchemy Pay currently supports 300 fiat payment channels across 173 countries, mainly in Southeast Asia. The platform is actively expanding its payment service worldwide, adding new licenses in the United States recently, including the states of Iowa and Arkansas.

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