UK bill committee opened a route to regulate crypto beyond stablecoins

A House of Commons Public Bill Committee agreed on October 25, 2022 to widen the Financial Services and Markets Bill’s prospective regulatory machinery so that it could cover cryptoassets.

Government amendment 22 added cryptoassets to the financial instruments, products and investments that could fall within the bill’s proposed “designated activities” regime. The change mattered because it created a legislative route for the Treasury to regulate activities connected with assets such as bitcoin and ether, rather than limiting the bill’s crypto provisions to payment systems involving digital settlement assets.

The committee’s action was an important procedural advance, but it was not a completed national crypto rulebook. Amendment 22 did not authorize an exchange, prohibit a token, impose capital requirements or immediately place every crypto business under Financial Conduct Authority supervision. The Financial Services and Markets Bill still had to complete its parliamentary stages, and detailed obligations would require further government and regulatory action.

A broader perimeter than stablecoin payments

The bill introduced in July 2022 already contained provisions through which the Treasury could regulate payments involving “digital settlement assets.” Government ministers described those provisions as initially focused on fiat-backed stablecoins used for payments.

During the October 25 committee debate, Financial Secretary to the Treasury Andrew Griffith said the government also wanted powers covering a broader set of crypto activities, including trading and investment involving bitcoin and ether. Amendment 22 addressed one part of that objective by specifying that cryptoassets could sit within the designated-activities framework proposed for insertion into the Financial Services and Markets Act 2000.

Under that framework, the Treasury could later identify an activity as designated when it related to UK financial markets or qualifying instruments, products or investments issued or sold to or by people in the United Kingdom. Subsequent regulations could prohibit an activity or subject it to requirements and regulator-made rules.

That structure distinguished the power to create regulation from the regulations themselves. On October 25, Parliament’s committee was expanding the available statutory perimeter; it was not deciding the final requirements for exchanges, custodians, issuers or investors.

The accompanying proposal remained unfinished

The committee debated amendment 22 alongside government new clause 14. That proposed clause would define a cryptoasset and clarify that existing Financial Services and Markets Act powers concerning financial promotions and regulated activities could be used for cryptoassets.

Griffith told the committee that cryptoassets would be treated like other forms of financial asset for regulatory-perimeter purposes, without receiving preferential status. He also said the Treasury would consult industry and other stakeholders before using the proposed powers. Secondary legislation bringing new crypto activities into the perimeter would be subject to an affirmative procedure requiring approval by both Houses.

The chronology is important. Hansard records amendment 22 as agreed on October 25, but new clause 14 was discussed rather than formally added during that sitting. Because amendment 22 relied on the definition proposed in new clause 14, the broader legislative package was still procedurally incomplete at the end of the event date.

What October 25 established

The defensible event-day conclusion is narrower than contemporary headlines suggesting that Britain had already recognized cryptocurrency as a fully regulated financial instrument. A Commons bill committee had accepted language enabling cryptoassets to be included in a future designated-activities regime and had debated complementary powers for promotions and regulated activities.

That was institutionally significant: the government was moving beyond a payments-only stablecoin framework toward activity-based oversight of a wider crypto market. It did not, however, establish which activities would ultimately be designated, what protections would apply or when any resulting requirements would begin.

Later procedural context

On November 3, 2022, the same Public Bill Committee formally added new clause 14 to the bill. That later action completed the definitional and Financial Services and Markets Act elements discussed on October 25. It is included only to clarify the legislative sequence, not as information available from the October 25 decision itself.