The Treasury has unveiled proposals to regulate cryptocurrencies, following widespread calls to action following the spectacular collapse of one of the world’s largest exchanges.
Promising a “robust” approach to digital assets in line with traditional finance, the government said it wants exchanges to have stricter and fairer standards.
Under the plan, cryptocurrency platforms will be responsible for determining the requirements that a currency must meet before being allowed to trade.
Exchanges will also be responsible for safely facilitating transactions and keeping client assets safe.
It comes after the deputy governor of the Bank of England told Sky News that cryptocurrency trading is “too dangerous” to stay outside of mainstream regulation.
Speak in the light of the sudden bankruptcy of the crypto platform FTXSir Jon Cunliffe describes the market as “extremely volatile” and said investors need more protection.
About 80,000 UK customers have been affected by the collapse of the world’s second-largest cryptocurrency exchange, with a British investor left with a £1 million loss in his finances.
FTXdisgraced founder, Sam Bankman-Friedsince then pleads not guilty to stealing billions of dollars in customer money.
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‘Regulating Cryptocurrencies Before System Crash’
Are government plans enough?
The proposals – which Labor says came too late – come as the crypto industry seeks to regain the confidence of frightened investors.
Since the crash of FTX, broader market turmoil has seen Bitcoin, the world’s largest token, fell to a five-month low and major exchange Coinbase cut its workforce by 20%.
Less than a year ago, Rishi Sunak, then prime minister, said he wanted the UK become a “global crypto-asset hub”.
Andrew Griffith, the Treasury Department’s economic secretary, said the government remains committed to enabling cryptocurrencies, but stressed the need to “protect consumers embracing this new technology”.
The plans will first be submitted for consultation, but the Treasury Department claims the regulation will be a “world first,” suggesting it will come before the expected cryptocurrency legislation. of the EU by 2024.
Meanwhile, the Ministry of Finance has announced that it will introduce a limited-time waiver to allow multiple crypto asset companies to issue promotions after a few weeks. cracking down on “misleading” advertising.
Companies registered with the Financial Conduct Authority for anti-money laundering purposes will be allowed to do so while broader regulation is in place.
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What is the main purpose of cryptocurrency?
‘We waited a long time’
Cryptocurrency scam expert Louise Abbott, a partner at Keystone Law, welcomes the proposals.
She told Sky News that the lack of regulation of the cryptocurrency makes it “extremely attractive to scammers”.
“We’ve been waiting in this industry for a long time,” she said.
“I deal with scams and have seen a significant increase in crypto scams and scams over the past 10 years. Last year, I received daily inquiries from potential victims. was scammed through a cryptocurrency scam.”
Ms. Abbot hopes the regulation could be in place as soon as the summer, adding that better market supervision is in the interest of both exchanges and investors.
Major industry players include Binance chief Changpeng Zhao, who saw his platform banned in the UK in 2021and Brian Armstrong of Coinbase have previously welcomed the prospect of more regulation.
“Unless we become a safer environment, investors will not invest the way we have seen,” Ms. Abbot added.
Varun Paul, a former fintech head at the Bank of England who is now a crypto infrastructure provider Fireblocks, also described the plan as a “positive step”.
He told Sky News that the industry turmoil meant there was a need for “clear rules” and expressed hope that UK regulation would do the job while encouraging innovation. .
