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Her Majesty’s Treasury has issued a long-awaited consultation paper on the UK’s upcoming crypto regulation. The massive 80-page document covers topics ranging from algorithmic stablecoin issues to non-fungible tokens (NFTs) and initial coin offerings (ICOs).
As stated by the Treasury, the proposal would put the UK financial services sector at the forefront of cryptocurrencies and seek to sidestep the heavy-handed regulatory measures that are gaining momentum globally amid crypto winter. Thing.
The Treasury has announced that there is no separate regulatory regime for cryptocurrencies as they fall within the framework of the UK’s Financial Services and Markets Act 2000 (FSMA). The goal is to level the playing field between cryptocurrencies and traditional finance. However, the UK’s main financial regulator, the Financial Conduct Authority (FCA), plans to adapt its existing FSMA rules for digital asset markets.
At least one nuisance from that decision is the obligation for crypto market participants to repeat the registration procedure. They already had to go through the process under the FCA licensing system, but now need to be evaluated “against the broader measures.”
The good news is that apart from traditional finance, crypto companies do not need to regularly report market data. However, the exchange must retain that data and make it available at all times.
The Treasury has decided not to ban algorithmic stablecoins, deviating from some of its international counterparts. Instead, we qualify them as “unbacked cryptoassets” rather than “stablecoins.” Nevertheless, crypto promotions should drop the term “stable” from marketing their algorithmic coins.
Related: Crypto scammers exploit ‘loose’ UK corporate law to trick victims
A separate regulatory regime for crypto trading platforms will be considered and, according to a consultation paper, lenders will need to factor in appropriate collateral valuations and contingency plans for the failure of a participant’s largest market counterparty.
Initial reaction to the agreement was optimistic.Binance spared no time welcome paper. Speaking to Cointelegraph, Ripple’s EMEA policy director, Andrew Whitworth, called it a “big step.”
“From today, governments should encourage greater collaboration with the private sector to devise comprehensive risk-based frameworks in line with international best practice.”
Nick Taylor, EMEA Public Policy Officer at global crypto exchange Luno, believes this is a pivotal moment for the industry. He commented:
“We still have a long way to go before the new rules come into force, but we are encouraged by the government’s ambitions.”
The consultation will end on April 30, 2023. In the meantime, the UK Government welcomes responses from all stakeholders, including cryptocurrency companies, financial institutions, industry associations, representative bodies, academics, law firms and consumer groups.
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