The first UK crypto regulation to set ‘robust’ standards

LONDON, Jan 31 (Reuters) – Britain’s Treasury is planning “robust” regulations for crypto assets, following the collapse of crypto exchange FTX last year, which left millions of people suffering. billions of dollars in losses.

Crypto is currently unregulated globally, with companies only having to perform checks to prevent money laundering. However, the UK’s Financial Conduct Authority (FCA) said more than 80% of license applicants were unable to prove they could do it properly because ‘dark money’ circulates in the industry.

The draft rules, to be released on Wednesday, would ensure robust, transparent and fair standards consistent with the approach to traditional finance, Financial Services Minister Andrew Griffith said in a statement on Tuesday.

“We remain true to our commitment to growing the economy and enabling technological change and innovation – and that includes crypto-asset technology,” Griffith said.

The new rules come after rising interest rates led to a series of bankruptcies in the industry in 2022, wiping $1.4 trillion from the value of the crypto market. The price of bitcoin, the most traded, plunged 60%.

The market rout has shaken confidence in cryptocurrencies, although interest in the underlying technology, more commonly known as blockchain, for other uses like payments remains.

There will be a three-month public consultation on the new plans, followed by detailed FCA rule proposals.

The ministry said its approach would mitigate the sector’s biggest risks.

“These proposals will empower crypto-trading platforms to define detailed content requirements for admission and disclosure documents – ensuring that crypto exchanges have fair and robust standards,” the ministry said.

There will be rules for financial intermediaries, which facilitate transactions, and custodians, which store client assets.

The failure of FTX and other exchanges has sparked calls for industry regulation to protect investors. Regulators are focused on valuing open “crypto conglomerates” that combine activities such as trading, lending and custody under one roof, but without the traditional regulatory safeguards between them.

The European Union is already finalizing its first set of crypto rules.

Firms already licensed by the FCA would be temporarily allowed to issue their own promotions, while the new regulatory regime is being introduced, the department said.

Reporting by Huw Jones; Editing by Sharon Singleton

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