UK Confirms Plans to Bring Crypto Under Stricter Rules - BLOOMBERG
BY Bloomberg News,
An attendee plays with a puzzle cube displaying logos of different cryptocurrencies and exchanges at the CryptoCompare Digital Asset Summit at Old Billingsgate in London, U.K., on Wednesday, March 30, 2022. Bitcoin and other cryptocurrencies had been, up until the last few weeks, mired in a similar downtrend as other riskier assets, like U.S. stocks. Photographer: Luke MacGregor/Bloomberg , Bloomberg
(Bloomberg) -- The UK government confirmed plans to regulate cryptoasset activities more strictly, bringing them under the same regime as traditional financial services.
The government intends to proceed with legislation in 2024 to implement the changes, according to a Treasury announcement on Monday, responding to a consultation it launched earlier this year.
The plans include a mandate for crypto exchanges to write detailed requirements on admission standards and disclosures for token issuers when listing new assets. This could include information about a token’s underlying code, known vulnerabilities and risks.
The UK’s push to regulate crypto is part of a wider effort by Prime Minister Rishi Sunak to attract more digital-asset businesses and investment to the country, while at the same time protecting consumers. Crypto firms have long complained that a lack of clear rules has made it hard for them to operate in the UK.
“We must make the UK a place where cryptoasset firms have the clarity needed to invest and innovate, and where customers have the protections necessary for confidently using these technologies,” said City Minister Andrew Griffith. “The UK is the obvious choice for starting and scaling a cryptoasset business.”
Earlier this month, the UK’s financial promotions regime was widened to include cryptoasset service providers, regardless of their location. All crypto platforms are now required to display clear risk warnings to UK-based consumers and meet higher technical standards.
The Treasury’s rule changes would come as regulators and policymakers across the world ramp up their scrutiny of the crypto sector following a year of turmoil for the industry. Earlier this year, the European Union approved the Markets in Cryproassets (MiCA) regime, a wide-ranging package of measures governing digital finance. The rules are currently the most comprehensive of any developed economy and have been welcomed by many in the sector.
Rules proposed by the Treasury include stricter requirements for custody of cryptoassets and a market abuse regime for crypto trading, based on current requirements for other financial instruments. The regime would apply regardless of where the person is based or where the trading takes place. This would include rules to cover insider dealing, market manipulation and unlawful disclosure of insider information, with obligations applying to crypto exchanges and other regulated market participants.
In its response to the consultation, the Treasury also pushed back against calls that retail investing in unbacked cryptoassets like Bitcoin should be regulated like gambling. The approach — which was put forward in May by the Treasury Select Committee — would “fail to appropriately mitigate many of the risks” of the asset class including market manipulation, the Treasury said.
(Updates to add details and context.)