United Kingdom considers Bitcoin purchases with loans and credit card

By Hannah Pérez

The financial regulator of Great Britain is considering restrictions for cryptocurrency purchases with money borrowed as the government works to implement a new regulation to the sector.

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• The United Kingdom FCA discusses new rules for the cryptocurrency industry.
• Among them, it considers restrictions for cryptocurrency purchases from loans.
• It is part of the broader efforts of the English government to regulate the sector.
• The United Kingdom Treasury revealed the plans this week, and will cooperate with the US in the regulation.

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As the United Kingdom prepares to introduce new rules to the cryptocurrency industry, the country’s financial regulators are weighing to restrict users to use money borrowed to buy Bitcoin.

In a document published on Friday, the Financial Behavior Authority (FCA) shared details about a possible prohibition related to the purchase of cryptocurrencies on credit.

The prohibition, even under discussion, would prevent Great Britain residents from participating in investments or acquisitions of digital assets such as Bitcoin From loans, including credit cards. The regulator could enforce the rule from Restrictions for companies that grant loans to consumers for such purposes.

The FCA wrote in the discussion document:

“We are exploring if it would be appropriate to restrict companies to accept credit as a means for consumers to buy cryptoactive. We are considering a series of restrictions, including the restriction of the use of credit cards to buy directly cryptoactive, and the use of a credit line provided by an electronic money company to do so“

Credit Restriction Does not include stablecoins

The restriction would seek to protect retail investors from the risks associated with cryptocurrency investment, with the broadest objective of promoting a digital financial environment that is safer and more transparent.

It would also force companies to have their headquarters in the United Kingdom if they deal with local clients, as reported The Guardian.

Meanwhile, The purchases of Stablecoins –A type of stable digital asset frequently linked to a sovereign digital currency such as the US dollar– They would be exempted from credit restrictionallowing both companies Circle.

The measure is part of a broader effort of the authority to establish a new rules frame to the cryptocurrency industry.

In particular, the FCA is looking for comments for a set of discussion rules aimed at regulating the cryptocurrency industry. The frame addresses different key aspects such as Staking (Participation or commitment), credits, loans, intermediaries and decentralized finances (DEFI). The agency is receiving comments from the public until June 13.

“Crypt is a growing industry. Currently, in large part, we want to create a cryptocurrency regime that provides companies with the clarity they need to innovate safely, while offering adequate market integrity levels and consumer protection“Said David Geale, Executive Director of Digital Payments and Finance of the FCA.

United Kingdom works on new rules for crypto

Currently, the FCA requires that all cryptocurrency companies operating in the United Kingdom register with the agency. However, its supervision is limited to controls against money laundering (AML), financial promotions and consumer protection.

Once approved, the new legislation would expand the authority of the FCA to more in full areas such as cryptocurrency exchanges, the issuance of Stablecoins and defi platforms.

The publication of the discussion document occurs just a few days after the United Kingdom government announced its plans to regulate the local cryptocurrency industry. His Majesty’s treasure revealed on Tuesday the plans to impose new and clear rules that allow to promote both consumers’ confidence and innovation.

The British government cited the growing adoption of cryptocurrencies in the country. He said that about 12% of the United Kingdom adults now maintain or have had assets such as Bitcoincompared to only 4% in 2021. It also cited the growing trend of fraudulent cryptocurrency scams and projects, which expose users to loss risks and more.

“We are making Great Britain the best place in the world to innovate – And the safest place for consumers. The solid rules around cryptocurrency will increase investor confidence, support Fintech’s growth and protect people throughout the United Kingdom ”said Chancellor Rachel Reeves.

International cryptocurrency regulation

The United Kingdom is looking to catch up with global efforts to regulate cryptocurrencies; especially after the European Union implemented its mica framework at the end of last year.

The United States is also accelerating its regulation efforts of the sector under the incoming administration of Donald Trump, who has been emphatic in its support for cryptocurrencies.

Trump, who has expressed his ambition to convert the US to a global cryptocurrency center, approved the creation of a strategic reserve of Bitcoin In March and has drawn among the main priorities of its agenda the signing of legislation for the sector, starting with a Stablcoins bill that hopes to have on your desk before August.

The English government said Tuesday that it will cooperate with the United States in regulation efforts through the United Kingdom financial regulation work group.

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Hannah Estefanía Pérez / Diariobitcoin

Image generated with AI tool, under free use license

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