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The UK government is pushing ahead with plans to bring the cryptocurrency industry under the umbrella of mainstream financial services regulation, even after the collapse of several high-profile digital asset firms last year troubled retail investors.
The Treasury Department said late Tuesday it would release a set of proposals to “regulate a wide range of cryptocurrency activities, consistent with its traditional approach to finance.” It also said it would temporarily withdraw its previous commitment to align the regulation of cryptocurrency promotions with the standards applicable to stocks, equities and insurance products.
The move follows a year of severe turmoil in the digital asset industry, including the collapse of Sam Bankman-Fried’s FTX cryptocurrency empire and lender Celsius, leaving individuals around the world with billions of dollars in frozen funds. The value of the top 500 crypto tokens also fell by $1.7 trillion last year.
A Treasury insider says the aim of the reforms is to move the UK’s cryptocurrency regulatory regime to a more “neutral” position.”We want to be a global crypto hub.” said one. “But we are adjusting our dials to reflect recent market events. No one is getting a free ride to hurt consumers.”
Following recent scandals in the crypto sector, the Treasury has downplayed its importance in the UK’s efforts to grow. “It’s relatively small,” said one Treasury official.
Labor Party’s shadow minister, Tulip Siddiq, said the UK’s main opposition “has been calling for a crackdown on the crypto Wild West for months”. “All the Conservatives have promised further consultations. We need to act now.”
The Treasury Department said on Tuesday it aims to tighten rules surrounding companies that facilitate crypto trading and protect customer assets.
Cryptocurrency activity is currently not regulated by the UK Financial Conduct Authority. However, digital asset service providers operating within our borders must go through Watchdog’s anti-money laundering review process. Around 85% of cryptocurrency groups that have tried to register with the FCA have failed, sparking criticism from the industry that the UK stifled innovation.
The government on Tuesday will begin a temporary exemption to allow virtual currency companies on anti-money laundering lists to advertise their services to the public even while a broader regulatory regime for cryptocurrency activities is put in place. said it was planned.
Although the FCA does not currently oversee financial promotions, the government announced last year “to give the FCA oversight of most cryptocurrency marketing, in line with the same high standards as other financial promotions such as stocks, equities and insurance.” We aim to change the law to The product will be preserved.”
“We have made it clear that the financial promotion regime needs to be expanded to cover crypto. Crypto businesses marketing to UK consumers, including those based abroad, We must start preparing for this scheme now,” said the FCA.
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