Britain’s first crypto regulations to set ‘sound’ standards |
LONDON, 31 January (Reuters) – Britain’s finance ministry has billions of people dollars loss-making cryptocurrency exchange FTX is planning “stronger” rules for crypto assets following its bankruptcy last year.
Crypto is currently unregulated globally, with firms only required to carry out checks to prevent money laundering. However, Britain’s Financial Conduct Authority (FCA) has said that more than 80% of license applicants cannot demonstrate they can do so adequately as “dark money” flows from the sector.
The draft rules, to be published on Wednesday, will provide robust, transparent and fair standards consistent with the approach to traditional finance, Financial Services Minister Andrew Griffith said in a statement on Tuesday.
“We remain committed to driving economic growth, technological change and innovation – and that includes cryptocurrency technology,” Griffith said.
The new rules come after rising interest rates triggered a series of bankruptcies in the sector in 2022 and wiped $1.4 trillion off the value of the cryptocurrency market. The price of the most traded bitcoin has fallen by 60%.
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The market failure has undermined confidence in cryptocurrencies, although there remains interest in the underlying technology, better known as blockchain, for other uses such as payments.
There will be a three-month public consultation on the new plans, followed by proposals from the FCA for detailed rules.
The ministry said its approach would reduce the most significant risks in the sector.
“These proposals will put responsibility on cryptocurrency trading venues to define detailed content requirements for acceptance and disclosure documents – ensuring that cryptocurrency exchanges have fair and robust standards,” the ministry said.
There will be rules for financial intermediaries that facilitate transactions and custodians that hold client assets.
The failure of FTX and other exchanges led to calls for industry regulation to protect investors. Regulators are focused on rewarding open “crypto conglomerates” that combine activities such as trading, lending and custody under one roof, but lack traditional regulatory safeguards between them.
European Union is already finalizing its first cryptocurrency regulations.
Firms already authorized by the FCA will be allowed to release their promotions temporarily while the new regulatory regime is implemented, the ministry said.
By Huw Jones report; Edited by Sharon Singleton
Our standards: Thomson Reuters Trust Principles.
2023-02-01 04:25:22
Source – reuters
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