UK government to regulate crypto activities
The UK government has announced plans to increase regulations on cryptoasset activities, claiming this will help them boost the economy and protect consumers.
Cryptoassets, more commonly known as ‘crypto’, are a relatively new, diverse and constantly evolving class of assets that have a range of potential benefits, but they also pose significant risks to the consumer.
According to the government, 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.
Last year alone, cryptocurrency attacks were the highest on record with attackers stealing just under $4 billion, with “huge spikes” in March and October – the latter was the biggest single month ever for cryptocurrency hacking with $775.7 million stolen in 32 separate attacks.
Despite the risks, crypto still has a major role to play in the global economy. Russians who oppose president Vladimir Putin’s invasion of Ukraine are helping the country by sending significant amounts of money “through cryptocurrency back channels”, according to Yahoo Finance, showing the potential the industry has to offer.
The UK said its new approach to regulation mitigates the most significant risks, while harnessing crypto technologies.
“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,” a government spokesperson said.
“The proposals will also strengthen the rules around financial intermediaries and custodians – which have responsibility for facilitating transactions and safely storing customer assets… 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.”
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.
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