The United Kingdom has announced “ambitious plans” to “robustly regulate” various crypto activities in order to protect customers and grow the economy. British authorities will accept public feedback on new regulatory proposals designed to govern digital assets similarly to traditional finance over the next three months.
Crypto market regulation aims to encourage innovation by the British government
New rules will be implemented in London to regulate crypto-related activities in line with traditional financial regulations. Public consultation on the proposals has begun and will run through the end of April. The UK Treasury reaffirms in the paper that “crypto technologies can have a profound impact across financial services.”This document provides an overview of the upcoming consultation process.
The British government also insisted that its regulatory approach “mitigates the most significant risks while harnessing the benefits of crypto technologies,” and expressed hopes that the crypto industry will be able to expand, invest, and create jobs. Deputy Treasury Secretary Andrew Griffith emphasized: “We remain steadfast in our commitment to grow the economy and facilitate technological change and innovation, including crypto-assets.” However, we must also protect the consumers who are adopting this new technology.
The proposed regulations aim to ensure that cryptocurrency exchanges “have fair and robust standards.” They will be in charge of “defining the detailed content requirements for admission and disclosure documents,” according to a Wednesday announcement. Officials have also stated that they intend to tighten regulations for intermediaries and custodians who facilitate cryptocurrency transactions and store customer digital assets. They believe this will contribute to the establishment of a “world-first regime” for crypto lending.
The move follows several high-profile failures in the crypto space, including the collapse of major crypto exchange FTX. The British government has previously stated its intention to enact regulations to prevent market abuses.
The majority of cryptocurrency asset companies in the United Kingdom do not receive regulatory approval.
The regulatory proposals follow the Financial Conduct Authority’s (FCA) announcement last week that the majority of entities seeking to do business with crypto assets in the United Kingdom, or 85% of all applicants, have failed to convince regulators that they can meet the country’s minimum anti-money laundering (AML) requirements.
The regulator stated that significant failures had been identified in areas such as due diligence, risk assessment, and transaction monitoring. “In many cases, key personnel lacked appropriate knowledge, skills, and experience to carry out assigned roles, and effectively control risks,” the FCA stated.