Plans to protect consumers and grow the economy by regulating cryptoasset activities have been announced by the UK government.
Cryptoassets – commonly 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 the consumer.
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.
Under plans set out by the government recently, it will seek to regulate a broad suite of cryptoasset 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 crypto exchanges have fair and robust standards.
The proposals will also strengthen the rules around financial intermediaries and custodians – which have responsibility for facilitating transactions and safely storing customer assets.
In addition, to address industry concerns about the small number of Financial Conduct Authority (FCA) authorised cryptoasset firms who can issue their own promotions, HM Treasury is also introducing a time limited exemption. Cryptoasset businesses that are registered with the FCA for anti-money laundering purposes will be allowed to issue their own promotions, while the broader cryptoasset regulatory regime is being introduced.
This approach delivers on the original policy intention of the measure to promote innovation, enhance consumer protection and ensure that cryptoasset promotions can be held to equivalent standards as promotions of financial services products with similar risk profiles.
The government’s approach to regulation mitigates the most significant risks, while harnessing the advantages of crypto technologies. They state that this enables a new and exciting sector to safely flourish and grow, boosting jobs and investment.
See: UK sets out plans to regulate crypto and protect consumers - GOV.UK (www.gov.uk)