The Financial Services and Markets Bill, which sweeps parts of crypto into financial regulation, came under scrutiny in the UK Parliament, where members of the House of Lords called for greater regulation for crypto assets after a turbulent year in the sector.

“The recent collapse of FTX has demonstrated both the volatility of the market and the vulnerability to fraud,” said Alan Smith, a member of the House of Lords, and one of the voices calling for greater crypto regulation. He compared crypto to online gambling.

The FSMB gives more power to UK regulators, like the Financial Conduct Authority, to supervise crypto assets. The bill also regulates stablecoins used for payments, and sets restrictions on advertising crypto to UK citizens. The second reading session on Tuesday evening gave the upper house lawmakers the opportunity to flag concerns on the bill, and draft amendments.

Some members noted that crypto will need a whole new regulatory approach. “The constant evolution of digital assets represents not just a financial revolution, but also a technological and conceptual revolution that will not fit simply into existing regulatory categories and approaches,” said Jonathan Hill, a member of the upper chamber. 

“Managing emerging innovation opportunities while preventing abuse is going to pose some really serious capacity and structural challenges to the regulator. Candidly, I have my doubts if the FCA is really ready for this,” he added.

Other Lords members, like George Bridges, voiced concerns over lack of sufficient accountability regimes for the regulators, which will be granted extra power through the bill.

Earlier on Tuesday, Treasury Minister Andrew Griffith told the House of Commons that he intends to build a regime for crypto assets and stablecoins “that foster growth and innovation” in 2023, though he suggested that no new legislation is likely to come out this year.

The UK government will publish a consultation report on crypto regulation in the coming weeks, Griffith said in the meeting. The minister hinted that unlike the consultation will include provisions for decentralized finance, contrary to the European Union's Markets in Crypto Assets regulation which largely excludes it.