The Treasury has published a consultation document on regulating crypto exchanges, lenders, and custodians. The document acknowledges that crypto assets offer various benefits but pose risks to consumers.
Treasury’s Consultation is Open For Public Comment Until April 30th
The Treasury stated that the consultation period, open for comments until April 30th, aims to provide “confidence and clarity to businesses and consumers.” The UK government aims to seize the opportunity presented by blockchain technology to protect consumers and position Britain as a leading hub for crypto-asset technology.
Furthermore, the framework is designed to support growth and development in the industry, promoting jobs and investment rather than limiting its potential. The UK government’s proposals come after the disastrous events in the crypto industry in 2022.
It highlights perceived structural weaknesses in certain business models within the crypto industry. The Treasury’s consultation aims to enhance the integrity of the digital asset market.
Its goal is to increase consumer protection by presenting proposed regulations preventing abuse in the crypto market”. However, the latest rules will require crypto exchanges to adopt more robust admission standards like detailed disclosure documents.
Furthermore, the proposed measures will reinforce the regulations for custodians and financial intermediaries to guarantee more secure transactions and safeguard users’ digital assets.
Talking about the consultation, Andrew Griffith, the Treasury’s economic secretary, said the Treasury will continue to grow the country’s economy and adopt technological innovations, including crypto-asset technology.
“We must safeguard consumers who are adopting this innovative technology by establishing strong, fair, and clear standards,” Griffith added.
The UK’s Crypto Roadmap
The proposed changes will permit crypto companies like Kraken, registered with the Financial Conduct Authority (FCA), to offer temporary promotions until the new regulatory framework is ready.
Nevertheless, these promotional activities for crypto assets will be subject to the same standards as those for financial services products with similar levels of risk. Meanwhile, this consultation is an extension of previous proposals from the UK Treasury that center around stablecoins and crypto asset advertisements.
Last April, Rishi Sunak, the Chancellor at the time, discussed an initiative to make the UK a crypto asset hub. With John Glen, the Treasury’s economic secretary at the time, Sunak presented a comprehensive plan for the future direction of cryptocurrency in the United Kingdom.
This roadmap encompassed the creation of new laws for a crypto infrastructure sandbox, which will support crypto companies, including innovation. Meanwhile, the UK is not the only country working on regulating its crypto sector.
Other countries, such as the US, Hong Kong, and Canada, are doing the same.