UK Releases Draft Rules on Regulating Crypto Sector
Britain’s finance ministry unveiled draft rules for regulating the crypto sector after investors lost billions of dollars amid the persisting crypto winter. The rules address several critical aspects of the troubled industry, including crypto exchanges, custody, lending, public offers, and more.
UK Ramps up Efforts to Regulate Crypto Sector Following a Chaotic 2022
The UK finance ministry released draft rules on Wednesday to regulate the troubled crypto industry, aimed at addressing the risks posed by the sector. The move comes after a string of collapses in the industry, including the crypto exchange FTX, highlighted risks that must be addressed.
“Our view is that this reinforces the case for clear, effective, timely regulation and proactive engagement with industry. This includes a proposal to bring centralised cryptoasset exchanges into financial services regulation for the first time, as well as other core activities like custody and lending.”– Financial Services Minister Andrew Griffith said in proposals put out to public consultation.
The proposed rules would cover various aspects of the crypto sector, including admission to trading platforms, public offers, transactions and remittances, platform operations, and custody. In addition, the rules would also address mining transactions or operating a node on a blockchain. Currently, crypto firms in the UK are only asked to comply with anti-money laundering requirements.
Crypto exchange Binance has welcomed the public consultation. The rapidly-growing giant claimed it has been “vocally supporting” the need for effective and proper regulation.
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5-10% of Adults in the UK Own Crypto
The British Finance ministry said surveys showed that 5-10% of adults living in the UK currently own cryptocurrencies, marking a 100% increase over the past one-two year. In addition, institutional investors’ interest in the sector is also on the rise, the ministry noted.
The release of the draft rules comes several months after the UK government said it plans to bring stablecoins under its regulatory framework. The government said stablecoin regulation would be the first of several planned for the crypto industry in the country before expanding to other assets.
The global crypto market cap fell substantially in 2022 after peaking at $3 trillion a year earlier. Challenging macroeconomic conditions, including 4-decade high inflation, jumbo interest rate hikes, and a series of collapses in the industry, resulted in arguably the coldest-ever ‘crypto winter.’
Editorial Update (1st February 2023, 7:39AM EST): Article updated to add more context and information.
Do you think further efforts by global regulators to crack down on crypto could restrict the sector’s growth? Let us know in the comments below.