UK: crypto regulation coming soon

A press release was published today on the UK government’s official website informing that Britain is drawing up plans for new crypto regulation aimed at protecting consumers. 

The press release states that the UK government will set out ambitious plans to strictly regulate crypto-assets, with the goal of providing clarity and confidence to both consumers and businesses. 

It is clear from these statements that the UK’s new crypto regulation is still in the works, but also that the UK government is intent on moving forward with the project. 

UK: new crypto regulation plan coming soon

Although the statement does not reveal in detail what new regulations the government is working on, it states that they include strengthening rules for crypto exchanges, and a robust regime for cryptocurrency lending. 

Indeed, it is possible that this initiative will focus primarily on crypto service providers, namely as exchanges or lending services that promise returns. By contrast, there is no mention of decentralized P2P services, so much so that the announcement goes so far as to state that the goal is only to mitigate the most significant risks, while still taking advantage of the benefits of crypto technology. 

In fact, Britain has wanted to become a crypto hub for some time now, so much so that in July last year, when he was not yet premier, Rishi Sunak specifically stated that he had ambitions to make the UK a global hub for cryptocurrency technology. 

Today’s official statement from the government explicitly states that the UK’s attitude toward this new sector allows it to flourish and grow safely, stimulating investment and new jobs.

In particular, this approach reveals a policy intention to promote innovation, improve consumer protection and ensure that crypto-asset promotions can be held to equivalent standards to those for traditional financial products with similar risk profiles.

Premier’s goals

Sunak, who was only elected premier in October, has to handle the hot potato of a slumping economy that needs to be revived. The previous premier, Liz Truss, only stayed in office for more than a month precisely because she failed to unravel this mess. 

The statement says Sunak’s plan to grow the economy also embraces technological change and innovation, particularly in the financial services sector where London in Europe plays a central role. 

Although the UK does not have the euro, and is no longer even part of the European Union, its financial market is still one of the most developed in Europe, with London already a continental hub in this respect. 

At the same time, however, the government also has ambitious plans to protect consumers through strict regulation of crypto-assets while still allowing the economy to grow.

According to the plans laid out by the government today, the new rules will seek to regulate a wide range of crypto-assets, in line with the approach to traditional finance, such that they will place responsibility on local exchange venues with detailed requirements for admission and disclosure documents, so as to ensure the exchanges themselves have fair and robust standards.

The consultation

In this regard, the government today launched a public consultation that will end on 30 April so as to gather feedback with which to draft and optimize the new legislation. 

The consultation builds on previous Treasury proposals focused on stablecoins and financial promotion of cryptocurrencies, and plans to receive proposals on exchanges, custody activities, and lending activities. 

For each activity, the consultation defines the main design features of the new regulatory regime, such as prudential requirements, data reporting, consumer protection, location policy, and operational resilience, and seeks to gather views on improving market integrity and consumer protection, even going so far as to define proposals for the cryptocurrency market abuse regime.

In addition, there will be strengthened regulations on financial intermediaries and custodians, which are those responsible for facilitating transactions and safely storing clients’ assets. 

Comment from the UK government on new crypto regulation

The statement is accompanied by a statement from Treasury Secretary Andrew Griffith, who 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.”