The UK Government plans to “set out ambitious plans” to fully regulate cryptoasset activities, including “strengthening” rules for crypto trading platforms and enacting a “robust world-first regime” for crypto lending.
The Treasury said it would unveil a series of proposals to “regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance”. It also said it would temporarily backtrack on a previous pledge to align the regulation of crypto promotions with the standards applied to stocks, shares and insurance products.
Regulation of crypto has long been expected, with calls growing strong in the past year as the UK set out a plan to become a crypto hub in April 2022 and then, subsequently, for the market to be hit a series of major scandals in the second half of last year.
“We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology,” said Economic Secretary to the Treasury Andrew Griffith.
“But we must also protect consumers who are embracing this new technology – ensuring robust, transparent, and fair standards,”
The Government plans to “set out ambitious plans” to fully regulate cryptoasset activities. This includes “strengthening” rules for crypto trading platforms and enacting a “robust world-first regime” for crypto lending, the process whereby investors can earn a financial return on assets.
It added that new rules will focus on regulating a “broad suite of crypto asset activities”, that will be consistent with its approach to traditional finance.
“These proposals will place responsibility on crypto trading venues for defining the detailed content requirements for admission and disclosure documents – ensuring crypto exchanges have fair and robust standards,” a government statement said.
Cryptocurrency activity is currently not regulated by the UK’s Financial Conduct Authority; however, digital asset service providers that operate within the country’s borders must go through the watchdog’s anti-money-laundering review process.
Around 85 per cent of crypto groups that attempt to obtain FCA registration have failed, stirring criticism from the industry that the UK has stifled innovation.
Strengthening financial intermediaries’ and custodians’ rules will be central to the proposals.
In addition, crypto asset businesses that are currently registered with the FCA for anti-money laundering purposes will be allowed to issue their own promotions, ahead of the broader cryptoasset regulatory regime being introduced.
“This approach delivers on the original policy intention of the measure to promote innovation, enhance consumer protection and ensure that crypto asset promotions can be held to equivalent standards as promotions of financial services products with similar risk profiles,” the statement added.
