UK Treasury Unveils Draft Crypto Regulations to Enhance Oversight and Consumer Protection

UK Treasury Releases Draft Crypto Regulations for Exchanges and Stablecoins

In a significant move aimed at establishing clearer boundaries within the cryptocurrency market, the UK Treasury has released draft regulations that will bring exchanges, stablecoins, and staking services under Financial Conduct Authority (FCA) oversight. The proposed rules aim to align with US regulatory approaches while supporting legitimate innovation.

According to recent government statistics, approximately 12% of British adults now own or have owned cryptocurrencies, a substantial increase from the 4% recorded in 2021. In light of this growth, it is imperative for the UK Treasury to address concerns around consumer protection and anti-money laundering regulations.

The draft legislation extends existing financial regulations to companies involved in cryptocurrency trading, including exchanges, dealers, and agents. This approach aligns Britain more closely with the United States rather than adopting a distinct set of rules similar to those implemented by the European Union.

Under the new framework, firms providing custody or staking services will require authorization if they operate within the UK or cater to UK consumers. However, truly decentralized finance (DeFi) activities that do not have an identifiable controlling party will be exempt from these authorization requirements.

The government also plans to revise the Financial Promotion Order 2005. Crypto firms authorized under the proposed regime will no longer need separate registration for promotional activities, eliminating temporary provisions that allowed registered but unauthorized companies to approve their own promotions.

To ensure a smooth transition, the Treasury has announced an application window before full implementation, allowing existing crypto firms to apply for authorization. Companies failing to secure approval during this period will be subject to a two-year wind-down process, during which they can maintain pre-existing contracts while ceasing all new business activity involving UK consumers.

The Financial Conduct Authority is responsible for overseeing the registration of crypto firms and ensuring compliance with anti-money laundering regulations.

Source: https://blockonomi.com/uk-treasury-releases-draft-crypto-regulations-for-exchanges-and-stablecoins/