Legislation – Financial Services and Markets Act 2023
PART 1Regulatory framework
CHAPTER 2New regulatory powers
Digital settlement assets
23Digital settlement assets: power to make regulations
(1)
The Treasury may by regulations make such provision as they consider appropriate for the purpose of, or in connection with—
(a)
the regulation of payments that include digital settlement assets,
(b)
the regulation of—
(i)
recognised payment systems that include arrangements using digital settlement assets,
(ii)
recognised DSA service providers, and
(iii)
service providers connected with, or in relation to, the systems and providers mentioned in sub-paragraphs (i) and (ii),
as those terms are for the time being defined in Part 5 of the Banking Act 2009, and
(c)
making insolvency arrangements (including administration, restructuring and any similar procedure) in respect of the systems and providers mentioned in paragraph (b).
(2)
In this section, “digital settlement asset” means a digital representation of value or rights, whether or not cryptographically secured, that—
(a)
can be used for the settlement of payment obligations,
(b)
can be transferred, stored or traded electronically, and
(c)
uses technology supporting the recording or storage of data (which may include distributed ledger technology).
(3)
The provision that may be made by regulations under this section includes provision—
(a)
applying legislation relating to the regulation of electronic money and payments to digital settlement assets (subject to whatever modifications the Treasury consider appropriate);
(b)
applying legislation relating to insolvency arrangements and interactions between different arrangements to the systems and providers mentioned in subsection (1) (subject to whatever modifications the Treasury consider appropriate);
(c)
conferring powers on the Treasury (including a power to legislate);
(d)
conferring powers, or imposing duties, on a relevant regulator (including a power to make rules or other instruments);
(e)
about fees or other charges payable to a relevant regulator;
(f)
about recognition orders and recognition criteria in Part 5 of the Banking Act 2009;
(g)
about the enforcement of obligations arising under or by virtue of the regulations;
(h)
about appeals in respect of decisions made under or by virtue of the regulations;
(i)
about the sharing of information.
(4)
Provision under subsection (3)(g) may include provision creating offences punishable on summary conviction—
(a)
in England and Wales, with imprisonment for a term not exceeding 3 months or a fine, or both;
(b)
in Scotland and Northern Ireland, with imprisonment for a term not exceeding 3 months or a fine not exceeding level 5 on the standard scale, or both.
(5)
The power to make regulations under this section includes power to modify legislation.
(6)
The power under subsection (5) includes power to modify the definition of “digital settlement asset” in subsection (2).
(7)
Regulations under this section are—
(a)
subject to the affirmative procedure, or
(b)
if the Treasury consider it necessary for the regulations to come into force without delay, subject to the made affirmative procedure.
(8)
Before making regulations under this section, the Treasury must consult—
(a)
the FCA,
(b)
the Bank of England, and
(c)
in relation to regulations that refer to the PRA or to the Payment Systems Regulator, those bodies.
(9)
Where regulations under this section are subject to the made affirmative procedure the statutory instrument containing them must be laid before Parliament after being made.
(10)
Regulations contained in a statutory instrument laid before Parliament under subsection (9) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.
(11)
In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—
(a)
Parliament is dissolved or prorogued, or
(b)
either House of Parliament is adjourned for more than four days.
(12)
If regulations cease to have effect as a result of subsection (10), that does not—
(a)
affect the validity of anything previously done under the regulations, or
(b)
prevent the making of new regulations.
(13)
In this section—
“legislation” means primary legislation, subordinate legislation and retained direct EU legislation;
“relevant regulator” means—
(a)
the FCA,
(b)
the Bank of England, or
(c)
the Payment Systems Regulator.