UK’s first crypto regulations setting “robust” standards

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

Crypto is currently unregulated globally, with firms only needing to carry out checks to prevent money laundering. However, the UK’s Financial Conduct Authority (FCA) has said that more than 80% of license applicants were unable to show they could do this properly as “dark money” flows through the sector.

The draft rules, to be published on Wednesday, will ensure robust, transparent and fair standards, consistent with the approach of traditional finance, Finance Minister Andrew Griffith said in a statement on Tuesday.

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

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

The market rout shook confidence in cryptocurrencies, although interest in the underlying technology, best known as blockchain, for other uses such as payments remains.

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

The ministry said its approach would reduce the key risks in the sector.

“These proposals will put the onus on crypto trading venues to define the detailed content requirements for admission and disclosure documents – to ensure that crypto exchanges have fair and robust standards,” the ministry said.

There will be rules for financial intermediaries, who facilitate transactions, and custodians, who keep customer funds.

The failure of FTX and other exchanges triggered calls for regulation of the industry to protect investors. Regulators are focusing on pricing open “crypto-conglomerates” that combine activities such as trading, lending and custody under one roof, but with absent traditional regulatory safeguards.

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

Firms already authorized by the FCA will be temporarily allowed to issue their own promotions while the new regulatory regime is introduced, the ministry said.

Reporting by Huw Jones; Editing by Sharon Singleton

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