New proposals under consultation seek to put the UK at the ‘forefront’ of crypto technology and innovation.
The UK has set out a detailed plan to regulate the crypto industry in the wake of the FTX collapse late last year.
Published today (1 February), the proposals are set to give consumers in the crypto industry confidence in their investments while also allowing the sector to blossom.
Rishi Sunak, the UK prime minister, is largely seen as crypto-friendly by industry experts. The latest move will aim to put the UK’s financial sector “at the forefront of cryptoasset technology and innovation” while managing “potential consumer and stability risks”.
“The government’s proposed measures have been informed by recent market events – including the failure of FTX – which reinforce the case for effective regulation and sector engagement,” the UK government wrote on its website.
The UK first committed to introducing a new regulatory regime for crypto in April 2022 to reflect on the “risks and opportunities” the industry represents. Since then, the value of cryptocurrencies such as Bitcoin and Ethereum have plummeted.
A consultation has now been launched on the proposals that will last until 30 April 2023. The full set of proposals currently under consultation can be accessed on the UK government website.
Some of the proposals include ensuring customer assets are returned to them in case a crypto business goes bust, laying down fair and just rules on promotion of crypto assets and enhancing data-reporting requirements – including with regulators.
The proposals also seek to implement new regulations that will prevent so-called ‘pump and dump’ – a practice whereby an individual artificially inflates the value of a crypto asset before selling it.
“We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology,” Andrew Griffith, economic secretary to the UK Treasury, said in a statement.
“But we must also protect consumers who are embracing this new technology – ensuring robust, transparent and fair standards.”
Shailendra Sason, CTO and co-founder of Solvo, a crypto investment app, reacted to the news, “As a crypto start up operating in the UK, we welcome the opportunity to consult with the Government on strengthening regulatory clarity. As a new business in a novel technology, regulatory uncertainty can have a chilling effect on the ability for us to quickly and effectively build products that support our customers.”
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Updated, 2.28pm, 2 February 2023: This article has been updated to include a quote from Shailendra Sason.