HM Treasury has hinted that it intends to regulate crypto-asset transactions in a manner similar to traditional finance, to provide greater clarity and confidence for consumers and businesses.
The recently unveiled measures, which are currently only proposals, will impose strict transparency standards on cryptocurrency exchanges, requiring them to publish essential disclosure documents and establish clear admission criteria for trading digital tokens. .
The government also plans to strengthen rules governing financial intermediaries and custodians, which are responsible for facilitating transactions and safeguarding client assets.
“These measures will help put in place a robust regime, a world first, strengthening the rules around the lending of crypto-assets, while improving consumer protection and the operational resilience of businesses,” the government said.
However, he added that he would “temporarily” backtrack on an earlier commitment to align regulations on the promotion of cryptocurrencies with those that apply to stocks and insurance products.
The move comes on the heels of a number of high-profile scandals affecting the crypto world over the past year, including the twin meltdowns of Sam Bankman-Fried’s FTX cryptocurrency exchange and lender Celsius, who left billions of dollars to people around the world. in frozen funds; as well as various hacks, thefts and links to organized crime.
Investors are now slashing the values of crypto companies following the collapse of FTX and falling cryptocurrency prices.
London-based cryptocurrency exchange Luno laid off 35% of its staff last week, affecting around 330 roles.
Lawmakers and regulators around the world are advocating for global collaboration to address the threats and opportunities associated with cryptocurrencies and blockchain technology.
Last year, the CEO of UK regulator the Financial Conduct Authority (FCA), Nikhil Rathi, stressed the need for global laws to “keep markets clean”. He said crypto regulation was “a high priority” and discussed the importance of regulatory work between the UK and US.
Market participants see Prime Minister Rishi Sunak, who has previously said he is determined to make the UK “the jurisdiction of choice for crypto and blockchain technology”, as a crypto-friendly leader.
As London looks to compete with EU financial hubs post-Brexit, industry insiders believe crypto could help.
“We remain steadfast in our commitment to growing the economy and enabling technological change and innovation – and that includes crypto-asset technology,” said Economic Secretary to the Treasury Andrew Griffith.
“But we also need to protect consumers who embrace this new technology – ensuring strong, transparent and fair standards.”
The Labor Party attacked the decision, saying the administration should stop using consultations.
“We need action now,” said Tulip Siddiq, Labor minister in the ghost town.
“Millions of UK consumer savings have been put at risk by the cryptocurrency meltdown as crypto-related scams hit record highs.”
Once the consultation is complete on April 30, the government will review the comments and work to formulate its response.
The FCA will consult on its specific regulations for the industry when introducing the legislation.