- The United Kingdom has proposed a framework for regulating the cryptocurrency market.
- One proposal aims to implement stricter regulations for crypto lending services.
- After the consultation ends on April 30, the administration will start drafting a response.
To curb the shady dealings that surfaced in the cryptocurrency market last year and ultimately led to FTX‘s bankruptcy, the U.K. government has reportedly outlined measures to regulate the sector.
On Tuesday, the Treasury Department announced it would release a series of proposals to “regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance.” In addition, it announced a temporary reversal of its commitment to bring cryptocurrency advertising regulations in line with those for stocks, shares, and insurance.
One of the initiatives proposed would tighten regulations on financial middlemen and custodians that hold cryptocurrency on their client’s behalf. There was a spike in high-risk loans issued between various crypto businesses in 2022, and little or no due diligence was performed on the counterparties engaged in these transactions.
The United Kingdom has proposed new legislation that would crack down on these kinds of practices, to create a “robust world-first regime strengthening rules around the lending of cryptoassets, whilst enhancing consumer protection and the operational resilience of firms,” as stated in the statement issued Tuesday.
Another proposal would loosen restrictions on crypto ads, permitting firms registered with the Financial Conduct Authority to issue their promotions throughout the transition to a more comprehensive crypto regulation.
According to Treasury insiders, Britain’s crypto regulatory environment has been too permissive before. Still, the insiders believe the goal of the amendments is to bring it to a more “neutral” stance.
“We do want to become a global crypto hub. But we are adjusting the dial to reflect recent market events. Nobody is getting a free ride to cause consumer detriment,” one of the insiders added.
In light of this, His Majesty’s Treasury will publish a highly anticipated consultation on Wednesday, in which they will solicit input from industry participants and experts on proposed regulations that aim to safeguard consumers while also supporting the country’s goal of becoming a center for crypto. The administration will consider the feedback into account and begin crafting a response after the consultation ends on April 30.
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