UK Government Aims to “Robustly” Regulate the Crypto Industry

• The UK government will announce measures to “robustly” regulate the crypto industry.
• The series of regulations is said to be proposed by the HM Treasury on February 1.
• Regulating crypto assets can be viewed as UK’s attempt to become the new Crypto Hub.

The UK government is all set to introduce measures that would bring the crypto industry under the umbrella of mainstream financial regulations, following last year’s catastrophic crashes of crypto exchange FTX and stablecoin issuer Terra rocked the industry and pushed retail investors to the edge of the cliff.

In a statement to the press, it was said that the widely-anticipated consultation, published by His Majesty’s Treasury on February 1, seeks input from industry members and experts on rules aimed at protecting consumers while also aligning with the country’s ambition to become a crypto hub.

The Treasury said that it would lay out a series of proposals to “regulate a broad suite of crypto asset activities, consistent with its approach to traditional finance.”

Furthermore, it was revealed that the Treasury would backtrack on a previous commitment to align the regulation of crypto promotions with the standards applied to stocks, shares, and insurance products. The consultation also suggests that crypto companies be subject to prudential and data reporting requirements.

Speaking on the matter, the economic secretary to the Treasury, Andrew Griffith commented:

We remain steadfast in our commitment to grow the economy and enable technological change and innovation—and this includes crypto asset technology, but we must also protect consumers who are embracing this new technology—ensuring robust, transparent, and fair standards.

With this, it can be said that the UK is attempting to catch up with the European Union, which is in the process of finalizing its Markets in Crypto Asset Regulation (MiCA), which is heavily focused on stablecoins and aims to establish a licensing regime for service providers.

Meanwhile, the UK’s Financial Services and Markets Bill, which is expected to empower crypto regulators with increased oversight, is being debated in the Parliament and is presumed to be finalized by April 2023. The local crypto industry has been awaiting some clarity regarding the operations, in the interim.

Concerns were voiced by the industry regarding how it should manage cryptocurrency advertising and promotion, which, as the upcoming rules indicate, won’t be permitted without approval.

Moreover, the Treasury would be implementing a “time limited exemption.” This would enable companies dealing in digital assets, registered under the anti-money laundering regime with the UK’s financial regulator, to run their own promotions until new rules are in place. Consultations will be open until April 30, following which the government will assess feedback and develop its response.