The UK government has detailed “ambitious” plans to regulate the crypto industry, with proposals on stronger rules for trading platforms, crypto lending, new token issues and more. The goal, it says, is to protect consumers and businesses, while enabling “a new and exciting sector to safely flourish and grow,” it wrote in a press release.
Last year saw the fall of FTX, Celsius and other crypto exchanges, along with wildly fluctuating prices for Bitcoin, Ethereum and other cryptocurrencies. As a result, critics in the UK have been calling for new rules that protect consumers from the “crypto wild-west,” as the opposition Labour party’s Tulip Siddiq put it.
The UK government plans to strengthen rules around the operation of crypto trading firms like FTX, along with other financial intermediaries. The primary aim, it wrote, is to enhance consumer protection and the ability of exchanges to weather storms. As part of that, it’s proposing what it calls a “crypto market abuse regime” that would create rules around money laundering and other illegal schemes. It also plans to strengthen laws around cryptocurrency lending.
At the same time, the treasury department is introducing a time-limited exemption that would allow designated crypto firms to issue new tokens. Companies registered with the UK’s Financial Conduct Authority (FCA) for anti-money laundering purposes would be allowed to issue coins while the new regulations are written.
In January 2022, the UK government promised a crackdown on misleading crypto ads, but that now seems quaint given the tumultuous year that followed. At the time, the government figured that around 2.3 million people in the country owned a cryptoasset.
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,” the government said. The consultation will close on April 30th, 2023, at which point regulators will review feedback and formulate a response.
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