The crypto industry in the UK will fall under the umbrella of mainstream financial services regulation says the UK government.
UK will regulate crypto in current framework
The Treasury said it will 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.
The move follows a year of acute turbulence in the digital asset industry, which included the collapse of FTX cryptocurrency empire and lender Celsius, which left individuals globally with billions of dollars in frozen funds.
The value of the 500 biggest crypto tokens also tumbled $1.7 trillion last year. Treasury insiders say the aim of the reforms is to move Britain’s crypto regulatory regime to a more “neutral” position following suggestions that its rules were previously too lax.
“We do want to become a global crypto hub,” said one. “But we are adjusting the dial to reflect recent market events. Nobody is getting a free ride to cause consumer detriment.”
The Treasury also said on Tuesday that it would seek to strengthen rules surrounding companies that facilitate crypto transactions and safeguard customer assets.
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.
The government also on Tuesday said it planned to open up a temporary exemption that would allow crypto companies registered on the anti-money-laundering list to promote their services to the public even while a broader regulatory regime for crypto activity is introduced.
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