🚨UK regulatory update on Bitcoin and crypto!🚨 A lot of chatter yesterday on this announcement – and not all of it helpful. TLDR: The statutory instrument (or "SI") published yesterday is the latest iteration of the revisions to the Financial Services and Markets Act 2000 (“FSMA”) (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, which have been in the pipeline for quite some time now. @Bitcoin Policy UK first provided evidence as part of this review of the future financial services regime in 2023 (see link in thread). In England and Wales, Parliament will ordinarily define what financial activities are regulated, and then separate and independent regulators (such as the FCA) will apply the relevant regulation to these activities. Most of this SI deals with what kinds of activities are to be regulated, and which firms or companies will require authorisation to undertake those activities. The SI does NOT in any way, shape or form regulate or affect the rules or operations of Bitcoin one iota, and anyone telling you that this draft legislation will ‘regulate Bitcoin’ does not understand the protocol or the system at all. ❓Key takeaways?❓ ▶️“Cryptoassets” are already defined in FSMA (as amended by the Financial Services and Markets Act 2023) as being “any cryptographically secured digital representation of value or contractual rights that— (a) can be transferred, stored or traded electronically, and (b) that uses technology supporting the recording or storage of data (which may include distributed ledger technology).” This definition is extremely broad, but as a legal concept it is a relatively fair way to describe both Bitcoin and other cryptoassets (though it inevitably falls short of the more esoteric and conceptual definitions that we as Bitcoiners might include). Broad definitions tend to be favoured in drafting legislation of this type, so as to capture as much as possible in the definition. ▶️The SI adds some new definitions to FSMA, including concepts of ‘qualifying stablecoin’, tokenised e-money and tokenised deposits. None appear particularly relevant to Bitcoin. ▶️The bulk of the SI is a bit of a nothingburger for Bitcoin, though is more important for companies offering Bitcoin-adjacent services (such as exchanges). Unsurprisingly, such companies are likely to require authorisation as regulated entities, undertaking regulated activities. This is entirely unsurprising and in all honesty most firms are already/are in the process of becoming, authorised to perform such regulated activities. ▶️Firms already authorised for the new cryptoasset activities will not be required to additionally register as “cryptoasset exchange providers” or “custodian wallet providers” under the money laundering regulations, and they only need to notify the FCA. This change is to avoid unnecessary and duplicative compliance burdens, and is helpful as regards (hopefully) cutting down on the compliance burden here. ▶️The following section I found interesting, as the draft legislation actually contemplates stablecoins being used for payments. If stablecoins do serve as a gateway to Bitcoin, this is an intriguing development: “the government has said it will not proceed with amending the PSRs 2017 to bring UK-issued stablecoins into regulated payments at this time. This does not mean that stablecoins cannot be used for payments in the UK, but simply that they will remain unregulated for payments for the time being. The government considers that stablecoins have the potential to play a significant role in both wholesale and retail payments, and stands ready to respond to this as part of wider payments reforms as use-cases and user adoption develops over time.” 🤔What’s missing?🤔 ▶️Nothing relating to whether a CGT exemption or de minimis threshold might apply for Bitcoin being used as a means of payment (but note that this is not a piece of fiscal or tax legislation; it relates to FSMA and to regulation of relevant activities). ▶️Recognition of Bitcoin as money, albeit not one issued by a nation state (though see the interesting quote above on payments with stablecoins, which could potentially lead to the inclusion of Bitcoin as one of these alternative means of payment). ▶️Addressing the definition of Bitcoin as a ‘restricted mass market investment’ by the FCA (but this is a matter for the FCA and not for this SI). ▶️Full details of any agreement or MOU between Reeves and the US Treasury Secretary. We know that there is a loose intention to work together here, so may be optimistic that the more enlightened attitudes to Bitcoin that we’ve seen from the US will rub off on us this side of the pond! 🚨Please do like and share – there has been a huge amount of misleading reaction to this circulated over the past 24 hours!🚨

As the US takes bold steps to create a Strategic Bitcoin Reserve, and BPI holds events with US Senators, ministers in the UK continue to laugh at Bitcoin and bury their heads in the sand. But the UK holds enough Bitcoin to keep pensioners warm for two full years and cover the entire Winter Fuel Payment until 2027. This is not a laughing matter. Today @Bitcoin Policy UK replied to the latest letter we received from HM Treasury. We set out responses to the criticisms they made in their last letter (also copied below) and continue to offer our time and expertise in helping them to understand this asset and to capitalise on our advantageous position, controlling as we do 61,000 coins. They may continue laughing, and continue ignoring us. But we will not stop doing everything we can to change this.

This is abominable government overreach. Remember, "we cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence." This egregious action by the UK should make everyone consider other options. We must all do our part to pass on the message of Nostr and the privacy tools being built here. Trying out 0xchat this weekend - anyone have any views on it so far? Apple used to tell us "think different". Now we really need to take their advice.

Why can't you easily lend your Bitcoin in the UK without incurring a tax charge? Largely because the current tax treatment of lending Bitcoin sees the transfer as a taxable event. By contrast with stocks, shares and other securities, Bitcoin falls outside the scope of repurchase or “repo” legislation that enables the lending of securities to be tax neutral. This has to change. There's a huge economic opportunity here, and the UK’s financial services sector needs to seize it; to capitalise on this £1 trillion-plus market, particularly by providing collateralised loans and other financial services that facilitate asset management. Yesterday, @Bitcoin Policy UK were proud to collaborate in drafting and adding our name to a letter sent to Rachel Reeves, Emma Reynolds and James Murray, urging them to prioritise legislation to treat the lending of Bitcoin as a "no gain, no loss" transaction. This change would simply reflect economic reality and ensure that Bitcoin is treated in just the same way as securities currently are. We're pleased to sign this letter alongside Coinbase, Greengage, Kraken Digital Asset Exchange, Recap and many others. We keep hearing that 'growth' is a priority for this Government. Let's now see those words turned into actions.

🚨 This is not a drill 🚨 Everyone who cares about their right to privacy and personal freedom should write to their MPs now. In the UK Labour are rushing through a Bill that could give the government the power not only to spy on your bank accounts, but to remove money directly from them. This is an appalling overreach of state power. More fundamentally, it reverses the presumption of innocence that is the keystone of the justice system in any fair society. If the state believes I have committed a crime, it must prove that beyond reasonable doubt in front of a jury of my peers. Until it does that, I am innocent. Punishment before proof is the mark of the tyrant. And why is this so important? Because transacting freely is fundamental to your ability to live a free and unencumbered life in an open society. Your decisions, your opinions, and your desires are all reflected in your transacting and spending choices. Fettering these is the simplest way for an authoritarian state to control you. We defeated these attempts before. We must defeat them again. Please share as widely as you can; use the template prepared by Big Brother Watch below to alert your MP NOW.

Stop Bank Spying — Big Brother Watch

Stop Bank Spying — Big Brother Watch

Get involved, write to your MP here!

No Spycoin — Big Brother Watch

No Spycoin — Big Brother Watch

The Government’s plan to pilot a Central Bank Digital Currency by 2025 would threaten privacy like never before. Find our more, and join our camp...

There’s so much to unpack in yesterday’s update on the UK’s CBDC - 🚨 both good and bad 🚨. 👉As we’ve previously predicted, a CBDC can’t be created without ‘Parliament’s approval’. This, crucially, gives the UK’s voters a bargaining chip. We all need to make clear to our MPs that we don’t want these monstrosities in our country, and that any MP who votes in favour of a CBDC will be punished at the ballot box. 👉CBDCs won’t be ‘like an electronic version of the banknotes issued by the Bank of England’. They would be programmable and would absolutely allow governments to monitor and control your spending. This is unacceptable in a free society. 👉It’s good news that even a ‘decision’ won’t be made until 2027. If that’s what they’re telling us now, the timetable will likely slip to at least 2029. 👉They pretend that ‘user’s privacy would be protected’. This is of course utterly false (see the admission in the second image below). The Bank of England’s own report, produced with MIT, undermines this assertion completely. A digital pound will give the Bank and the Government effectively total control over your money, your spending, and by extension, over you. If you don’t like the sound of that, then join us in fighting back. The battle is far from over, and it’s absolutely crucial that we win.

For our overseas friends, this is absolutely typical of the state of the UK and a perfect indicator of quite how massively shafted it currently is. Only in the UK would the government manage to ensure there is no Wifi connection at the very event where you are pretending to launch a 'bold new AI strategy'.

Bond market jitters may be a global problem. But what might be happening here is fundamental. A modern monetary theorist will tell you that a state who can print its own money can never go 'bankrupt'. Even more so if the state's debts are denominated in their own currency (as they are in the US or the UK). And actually, I agree with them up to this point. A state can keep on printing money to pay interest on its debts, ad infinitum. All good so far. But where MMT and reality part company is in MMT's failure to consider the second and third order consequences of creating vast amounts of new money in order to service existing debts. Modern money is effectively CREDIT; credit means trust, and most especially, trust that you'll be paid back what you are owed (and that the money will be worth something when that happens). Creating new money debases the currency by immediately reducing the value and purchasing power of all pre-existing money in the system. Secondly, the creation of new money causes price inflation as a larger amount of currency is able to chase the same amount of goods and services (there always being a lag before the supply can catch up with new demand). Thirdly, the distribution of new currency is not equal. In the modern economy, the majority of new money is created by banks making loans, and the new money accrues to those in a position to borrow, or to those who are connected with the banks themselves. This is the Cantillon Effect in action. So what is the conclusion to all this, and what is likely to happen? A few guesses: - > No nation state is remotely capable of paying down the unimaginable sums below. The principal amounts here will only ever be refinanced, never repaid. - > Government is an inherently unproductive enterprise. Governments obtain funds from their productive population, or from borrowing. If markets lose confidence in their ability to repay (or, importantly, in the ongoing value of their currencies), they will tax their populations harder. They could cut government spending, but they tend not to like doing that.... - > servicing these giant debt burdens will lead, inevitably, to currency debasement. So what can you do, as an individual caught up in the middle of this mess that is not of your making? If you're one of the lucky ones who has any savings at all, recognise that leaving these savings in the currency of a government that wilfully debases them is, perhaps, not a good idea. If you don't have any savings, and if you live paycheck to paycheck, then I'm really not sure what the solution is. I'm afraid that these people vastly outnumber the lucky ones, and I hope we collectively manage to stop this monetary madness before something breaks. But it may already be too late for that.