Financial Services and Markets Act 2023

4 (1) Section 182 (interpretation of payment system) is amended as follows.

(2) In the heading, for ““payment system”” substitute “key terms”.

(3) In subsection (1), after “money” insert “or digital settlement assets”.

(4) After subsection (4) insert—

“(4A) In subsection (1) “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).

(4B) In this section, “digital settlement asset” includes a right to, or an interest in, a digital settlement asset.”

(5) After subsection (5) insert—

“(5A) In this Part, a “DSA service provider” is a person who provides one or more services in relation to a payment system that includes arrangements using digital settlement assets where—

(a) the person creates or issues the digital settlement assets involved in the payment system,

(b) the person provides services to safeguard, or to safeguard and administer, digital settlement assets including their private cryptographic keys (or means of access),

(c) the person is directly involved in any of the activities mentioned in paragraphs (a) or (b),

(d) the person is a digital settlement asset exchange provider,

(e) the person sets rules, standards, or conditions of access or participation in relation to the payment system, or

(f) the person provides any service that facilitates, or supports, a transfer of money or digital settlement assets to be made using the payment system, including any infrastructure provider in relation to the system.

(5B) In this Part “digital settlement asset exchange provider” means a person who provides one or more of the following services, including as creator or issuer of any of the digital settlement assets, by—

(a) exchanging, or arranging the exchange of—

(i) digital settlement assets for money,

(ii) money for digital settlement assets,

(iii) digital settlement assets and money for digital settlement assets, or

(iv) digital settlement assets and money for money,

(b) exchanging, or arranging the exchange of, one digital settlement asset for another, or

(c) operating an automated process to carry out any of the activities mentioned in paragraphs (a) and (b).

(5C) The Treasury may by regulations amend—

(a) the definition of “digital settlement asset” in subsection (4A);

(b) the definition of “DSA service provider” in subsection (5A);

(c) the definition in section 206AA of a person who provides services connected with a recognised payment system that uses digital settlement assets.”