UK Lays Out Regulatory Plans for the Crypto Industry
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The regulatory move comes as crypto firms in both the U.K. and beyond are feeling the chill of a deep downturn known as “crypto winter.”
UK Crypto Regulatory Plans to Target Financial Intermediaries
Among the proposals unveiled Tuesday was a move that would strengthen rules targeting financial intermediaries and custodians that store crypto on behalf of clients. A big theme that emerged in 2022 was the rise of risky loans made between multiple crypto firms and a lack of due diligence done on the counterparties involved in those transactions.
The U.K. crypto regulatory plans would crack down on such activities. The collapse of FTX has added urgency to global regulators’ attempts to govern the regulation-averse crypto space. The European Union and the U.S. have already made proposals of their own to improve consumer protections in crypto.
Regulations Would Tighten The Screw Around Crypto Exchanges
The implosion of FTX, which allegedly used customer money to make risky loans and trades, set off a chain reaction of bankruptcies for digital asset lending firms with exposure to the crypto giant, including BlockFi and Digital Currency Group’s Genesis Trading.
The proposals unveiled Tuesday would also enforce tougher transparency requirements on crypto exchanges to ensure they publish relevant disclosure documents and set out clear admission requirements for trading digital tokens.
Another measure would relax strict rules on crypto advertisements, allowing firms with Financial Conduct Authority registration to issue their own promotions while the broader crypto regime is being introduced.