The Government has confirmed new measures to regulate the cryptocurrency industry following growing calls to strengthen safeguards for consumers.
On Monday, the Treasury published its response to a consultation paper on the future of crypto industry rules.
New proposals include the introduction of the same regulations which govern banks and other financial services firms for a several cryptoasset activities.
Demand for tougher supervision surged after the collapse of FTX, which caused vast financial losses for thousands of investors.
New proposals include the introduction of the same regulations which govern banks and other financial services firms for a several cryptoasset activities
Reuters
Government plans will see stricter rules for exchanges, custodians that store crypto on behalf of clients, and crypto lending companies.
According to the paper, secondary legislation for the new rules will be introduced by 2024.
Under new proposals, stablecoins – a type of crypto token which are pegged to an existing currency and can be used to make digital payments – will be regulated by existing rules for traditional payment service providers.
The Treasury said: “Certain stablecoins have the potential to become a widespread means of retail payment, driving consumer choice and efficiencies”.
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The crypto industry “should follow the standards expected of similar existing financial service activities, commensurate to the risks they pose,” the Government said.
In a statement Andrew Griffith, the UK financial services minister, added: “I am very pleased to present these final proposals for cryptoasset regulation in the UK on behalf of the Government.
“I look forward to our continued work with the sector in making our vision a reality for the UK as a global hub for cryptoasset technology.”
However, some financial regulation experts have raised concerns over the new proposals.
Calls for a cryptocurrency crackdown grew after Sam Bankman-Fried’s FTX collapsed
Reuters
“It’s unlikely that crypto regulation will be easily shoehorned into the existing regulatory framework,” Jonathan Cavill, a partner at law firm Pinsent Masons told the Financial Times.
“Time, money and thought will need to be given on how this can be achieved quickly.”
He added that the rules were “likely to create a change in the way in which the industry will be structured and developed,” and that “becoming regulated and maintaining regulation and compliance is incredibly expensive, time-consuming”.
