The UK government has announced its ambitious plans to regulate cryptoasset activities, providing confidence and clarity to both consumers and businesses. This move delivers on the Prime Minister’s plan to grow the economy by embracing technological change and innovation while protecting consumers.
Andrew Griffith, Economic Secretary to the Treasury, 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.”
Cryptoassets, or ‘crypto’, are a new, diverse, and constantly evolving class of assets that have potential benefits and risks. The crypto sector continues to face high levels of volatility and recent failures have exposed some business models’ structural vulnerability. The government’s robust approach to regulation aims to mitigate the risks while harnessing the advantages of crypto technologies, enabling the sector to flourish and grow.
Under the plans, the government will regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance. Crypto trading venues will be responsible for defining the content requirements for admission and disclosure documents, ensuring fair and robust standards. The rules around financial intermediaries and custodians will be strengthened, with the aim of delivering a robust world-first regime for crypto lending. The consultation will also seek views on improving market integrity and consumer protection through a proposed crypto market abuse regime.
HM Treasury is also introducing a time-limited exemption for cryptoasset businesses that are registered with the Financial Conduct Authority (FCA) for anti-money laundering purposes. These businesses will be allowed to issue their own promotions while the broader cryptoasset regulatory regime is being introduced.
The consultation, which will close on 30 April 2023, builds on previous HM Treasury proposals and focuses on exchange activities, custody activities, and lending activities, which the government intends to bring into the regulatory perimeter for financial services. The consultation paper also proposes regimes for cross-cutting issues such as market abuse and cryptoasset issuance and disclosures.
The UK government’s announcement positions the country as a safe jurisdiction for cryptoasset activity and provides firms with clarity over the planned regulatory framework. The consultation delivers on the original policy intention of promoting innovation, enhancing consumer protection, and ensuring cryptoasset promotions are held to the same standards as promotions of financial services products with similar risk profiles.
“Today’s announcement delivers against the plans to become a global hub for cryptoasset technology,” said Griffith. “This positions the UK as a safe jurisdiction for cryptoasset activity to take place, fostering innovation and providing firms clarity over the planned regulatory framework.”
Photo by Art Rachen on Unsplash
