UK Plans to Regulate Crypto for Consumer Protection
UK Plans to Regulate Crypto for Consumer Protection

The UK government has announced a set of ambitious plans to regulate cryptoasset activities, ensuring consumer protection and clarity for businesses. The proposals will mitigate risks and embrace the advantages of crypto technologies, enabling a new and exciting sector to safely flourish and grow, boosting jobs and investment.

Crypto assets, also known as ‘crypto,’ are a new, diverse, and constantly evolving class of assets that have a range of potential benefits, as well as posing risks to the consumer. The government aims to regulate a broad suite of crypto asset activities, consistent with its approach to traditional finance.

The government is introducing a time-limited exemption for crypto asset businesses that are registered with the Financial Conduct Authority (FCA) for anti-money laundering purposes. These firms will be allowed to issue their own promotions while the broader crypto asset regulatory regime is being introduced.

The UK government has released plans to regulate crypto assets and safeguard consumers while promoting innovation and growth in the sector. The proposed regulations will place responsibility on crypto trading venues, strengthen rules around financial intermediaries and custodians, and introduce a time-limited exemption for registered crypto asset businesses to issue their own promotions. The government aims to position the UK as a safe jurisdiction for crypto asset activity, fostering innovation and providing firms with clarity over the regulatory framework.

The proposed regulations cover a range of important crypto asset activities, including exchange, custody, and lending activities. The government plans to consult on improving market integrity and consumer protection by setting out a proposed crypto market abuse regime. The consultation will seek views on key design features of the regime, including prudential requirements, data reporting, consumer protection, location policy, and operational resilience. It will also propose regimes for a range of cross-cutting issues, including market abuse and crypto asset issuance and disclosures.

The government’s announcement delivers on the original policy intention of promoting innovation, enhancing consumer protection, and ensuring that crypto asset promotions can be held to equivalent standards as promotions of financial services products with similar risk profiles. The government’s robust approach to regulation will mitigate the most significant risks while harnessing the advantages of crypto technologies, enabling a new and exciting sector to safely flourish and grow, boosting jobs and investment.

The Financial Conduct Authority (FCA) officials have told a UK parliamentary committee that crypto regulation is unavoidable. During a hearing on March 8th, the FCA chairman Ashley Alder and CEO Nikhil Rathi discussed various issues, including predatory lending, mortgage rates, and cryptocurrency regulation. While they approached the topic with a clear lack of enthusiasm, they both agreed that financial regulation needs to be appropriately tough.

Former FCA chairman Charles Randell sent a letter to the committee, stating that speculative crypto is gambling and should be regulated and taxed as such. Alder responded by saying that globally, financial regulators would be the only ones to look at crypto from a regulatory perspective. However, he also acknowledged that crypto would need to adapt and detoxify to fit within the same risk, same regulation regime.

Rathi added that the Financial Services and Markets Act, when passed, would give the FCA new regulatory powers over the crypto industry but would not eliminate the risks posed by cryptocurrency. He noted that most British crypto holders own no more than a few hundred pounds’ worth of cryptocurrency.

While the FCA officials did not seem thrilled about regulating crypto, they conceded that it was necessary to tackle public policy issues such as money laundering. Furthermore, the Financial Services and Markets Act, when enacted, would provide a regulatory framework that would protect consumers from losses to some extent.

Important to note, that most of the exchanges are still not regulated by the FCA, so it is quite possible to stumble upon a fishy one. If you fall victim to crypto fraud, it’s important to take immediate action. Fortunately, there are resources available to help you navigate the process of recovering your losses. Cyberclaims is a leading provider of recovery services for victims of crypto fraud. With a team of experienced professionals and cutting-edge technology, Cyberclaims can help you trace the funds and work towards obtaining a resolution that could potentially recover your loss. Don’t hesitate to reach out if you need assistance in recovering your funds.


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