- The government will set out ambitious plans to robustly
regulate cryptoasset activities – providing confidence and
clarity to consumers and businesses alike
- Consultation proposals include strengthening rules for crypto
trading platforms and a robust world-first regime for crypto
lending
- Announcement delivers on financial services roadmap by
embracing technological change and innovation, delivering on the
Prime Minister’s plan to grow the economy
Ambitious plans to protect consumers and grow the economy by
robustly regulating cryptoasset activities have been announced by
the government.
Cryptoassets – commonly known as ‘crypto’ – are a relatively new,
diverse and constantly evolving class of assets that have a range
of potential benefits, as well as posing risks to the consumer.
As is common in emerging technology markets, the crypto sector
continues to experience high levels of volatility and a number of
recent failures have exposed the structural vulnerability of some
business models in the sector.
Our robust approach to regulation mitigates the most significant
risks, while harnessing the advantages of crypto technologies.
This enables a new and exciting sector to safely flourish and
grow, boosting jobs and investment.
Economic Secretary to the Treasury, said:
“We remain steadfast in our commitment to grow the economy and
enable technological change and innovation – and this includes
cryptoasset technology.
“But we must also protect consumers who are embracing this new
technology - ensuring robust, transparent, and fair standards.”
Under plans set out by the government today (1 February), it will
seek to regulate a broad suite of cryptoasset activities,
consistent with its approach to traditional finance.
These proposals will place responsibility on crypto trading
venues for defining the detailed content requirements for
admission and disclosure documents – ensuring crypto exchanges
have fair and robust standards.
The proposals will also strengthen the rules around financial
intermediaries and custodians – which have responsibility for
facilitating transactions and safely storing customer assets.
These steps will help to deliver a robust world-first regime
strengthening rules around the lending of cryptoassets, whilst
enhancing consumer protection and the operational resilience of
firms. As part of this approach, the consultation will seek views
on improving market integrity and consumer protection by setting
out a proposed crypto market abuse regime.
In addition, to address industry concerns about the small number
of Financial Conduct Authority (FCA) authorised cryptoasset
firms who can issue their own promotions, HM Treasury is also
introducing a time limited exemption. Cryptoasset businesses that
are registered with the FCA for anti-money
laundering purposes will be allowed to issue their own
promotions, while the broader cryptoasset regulatory regime is
being introduced.
This approach 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.
Further information
- Today’s consultation (published 1 February) will close on 30
April 2023, after which, the government will consider feedback
and work to set out its consultation response. Once legislation
is laid, the Financial Conduct Authority will consult on its
detailed rules for the sector
- In April 2022, the then Economic Secretary, MP, set out ambitious plans for
the UK to become a global hub for cryptoasset technology
- Today’s announcement delivers against these plans,
positioning the UK as a safe jurisdiction for cryptoasset
activity to take place, fostering innovation and providing firms
clarity over the planned regulatory framework.
- The consultation builds on previous HM Treasury proposals,
which focused on stablecoins and the financial promotion of
cryptoassets
- Proposals are centred around a number of important
cryptoasset activities – including exchange activities, custody
activities and lending activities, which the government is
intending to bring into the regulatory perimeter for financial
services
- For each activity the consultation sets out key design
features of the regime covering themes such as prudential
requirements, data reporting, consumer protection, location
policy and operational resilience
- The consultation paper also proposes regimes for a range of
cross-cutting issues which apply across cryptoasset activities
and business models, including market abuse and cryptoasset
issuance and disclosures
