UK Gov sets out crypto regulations

Plans to protect consumers and potentially grow the economy by regulating cyrptoasset activities have been announced by the government.

Cryptoassets – otherwise known as crypto – are a relatively new, diverse, and constantly evolving class of assets that have a range of potential benefits, as well as posing risks to consumers.

As is common in emerging technology markets, the crypto sector continues to experience high levels of volatility and a number of recent failures have exposed the structural vulnerability of some business models in the sector.

The government assures consumers that their robust approach to regulation mitigates the most significant risks, while harnessing the advantages of crypto technologies.

Economic Secretary to the Treasury, Andrew Griffith said: “We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology.

“But we must also protect consumers who are embracing this new technology – ensuring robust, transparent, and fair standards.”

Along with this announcement, the government released their plans seeking out how to regulate a broad suite of cryprotasset activities, 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 cyrpto exchanges have fair and robust standards.

Rules around financial intermediaries and custodians will also be strengthened, as they have the ability to facilitate transactions and store customer assets.

These steps hope to deliver a world-first regime strengthening rules around the lending of cyrptoassets while enhancing consumer protection and operational resilience of firms.

As part of this approach, the consultation will seek views on improving market integrity and consumer protection by setting out a proposed crypto market abuse regime.

To address current industry concerns about the small number of Financial Conduct Authority (FCA) approved cryptoasset firms who can issue their own promotions, HM Treasury is also introducing a time limited exemption, which will allow these businesses to issue their own promotions while the broader cryptoasset regulatory regime is being introduced.

The consultation will close on 30 April 2023, after which the government will consider feedback and work out its consultation response.

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