• The United Kingdom has released plans to regulate the cryptocurrency industry within the country.
• The report focuses on trading and lending, with proposals placing responsibility on crypto exchanges and firms to define disclosure documents.
• The consultation also highlights the importance of responsible practices for custodians and intermediaries to safely store customer assets.
UK Announces Plans To Regulate Cryptocurrency Industry
The United Kingdom has released its plans to regulate the cryptocurrency industry within the country. Specifically focusing on trading and lending, the report describes how the United Kingdom’s government “will seek to regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance.” In order to ensure the safety of customer funds, the consultation will seek to create a framework with clear guidelines for responsible practices.
Proposals for Crypto Exchanges & Firms
The proposals place responsibility on cryptocurrency exchanges and firms to define detailed content requirements for disclosure documents, ensuring “fair” standards. Economic Secretary to the Treasury Andrew Griffith remarked that this move is part of their commitment “to grow the economy and enable technological change and innovation – and this includes cryptoasset technology”. The consultation will conclude on April 30, 2023, after which time they will consider feedback before legislating further rules for this sector.
Responsible Practices For Custodians & Intermediaries
The consultation also highlighted the necessity for cryptocurrency custodial actors and intermediaries to responsibly facilitate transactions and safely store customer assets. This is especially important in light of recent events throughout the cryptocurrency space that have left millions of customers without access to their funds.
Reasons Behind Regulation
The report states that “high levels of volatility and a number of recent failures have exposed the structural vulnerability of some business models in the sector,” amongst other reasons, as justification behind regulating this industry further.
Overall, this new set of regulatory guidelines aims at protecting customers from any potential risks associated with investing in cryptocurrencies by creating clear regulations around trading platforms and custodian services that are required when dealing with digital assets such as Bitcoin or Ethereum.