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The UK government has published a set of proposals it hopes will “protect consumers” from the risks associated with crypto assets.
The UK has formally announced its plans to regulate the cryptocurrency industry, with the government looking to rein in some of the reckless business practices that characterise the “turbulent industry”.
The government has therefore proposed a number of measures aimed at bringing regulation of crypto asset businesses in line with that of traditional financial firms.
The Treasury says that will allow crypto to benefit from the “confidence, credibility and regulatory clarity” of the existing system for financial services, as set out in the UK’s Financial Services and Markets Act 2000 (FSMA).
In doing so, the government aims to create a “robust approach” that will mitigate “the most significant risks”, but also allow the UK to tap into the advantages of crypto technologies.
The move comes after a series of high-profile global failures have rocked the relatively new, burgeoning sector, leading to assets collapsing in value by an estimated 75 per cent from their peak of about $3tn in November 2021.
Under the plans under consultation, crypto trading venues will be responsible for “defining the detailed content requirements for admission and disclosure documents”. This, the Treasury said, would ensure that “crypto exchanges have fair and robust standards”.
It also said that it would strengthen rules around financial intermediaries and custodians.
“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.”
Labour criticised the decision, stating that the government needed to move away from consultations.
“We need action now,” said Tulip Siddiq, Labour shadow city minister. “Millions of British consumers’ savings have been put at risk by the collapse of cryptocurrencies while crypto-related scams have hit record levels.”
Last year, the Financial Conduct Authority began inspecting the money-laundering controls of UK-based crypto companies. Around that same time, authorities banned Binance from operating in the UK, as it lacked regulatory permissions. In June, Scotland Yard said it had seized a record £114m of Bitcoin as part of an investigation into money-laundering offences.
In July, the European Commission, EU lawmakers and member states reached an agreement on what has been considered the first major regulatory framework for the cryptocurrency industry.
The UK consultation will run until April 30 2023, the Treasury said.
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