The UK government has unveiled “ambitious” plans to regulate the cryptocurrency industry, including proposals for stricter rules for trading platforms, crypto lending, new token issuances, and other initiatives.
The goal, according to the government, is to protect consumers and businesses while allowing “a new and exciting sector to safely flourish and grow,” according to a press release.
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Last year saw the demise of FTX, Celsius, and other crypto exchanges, as well as wildly fluctuating Bitcoin, Ethereum, and other cryptocurrency prices.
As a result, critics in the United Kingdom have called for new regulations to protect consumers from the “crypto wild-west,” as opposition Labour Party member Tulip Siddiq put it.
The UK government intends to tighten regulations governing the operation of crypto trading firms such as FTX and other financial intermediaries.
The primary goal, it stated, is to improve consumer protection and exchanges’ ability to weather storms.
As part of that, it proposes a “crypto market abuse regime” that would establish rules for money laundering and other illegal schemes. It also intends to tighten regulations governing cryptocurrency lending.
Simultaneously, the Treasury Department is proposing a limited-time exemption that would allow designated crypto firms to issue new tokens. Companies that are registered with the UK’s Financial Conduct Authority (FCA) for anti-money laundering purposes would be permitted to issue coins while the new regulations are being developed.
The UK government promised a crackdown on misleading crypto ads in January 2022, but that now seems quaint given the tumultuous year that followed. The government estimated that approximately 2.3 million people in the country owned a cryptoasset at the time.
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Today’s proposal “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,” according to the government.
The consultation will end on April 30, 2023, after which regulators will review the feedback and formulate a response.
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