As the cryptocurrency industry continues to grow in adoption and bad actors, the market has yawned for regulation as never before seen, especially with recent crashes that affected the crypto market negatively but could have been curbed with proper regulation.
According to the latest update, the UK is willing to take the first step among other global leaders to bring that regulation into the cryptocurrency industry.
In an industry consultation that took place on Tuesday, the UK laid out its plans to regulate the crypto industry. The UK government set out several measures to control the crypto-related businesses sector just as traditional financial firms are watched over.
UK Proposes Targeted Sectors To Regulate
The main targeted aspects proposed to be regulated by the UK government includes the sector that allows financial intermediaries and custodians to store crypto assets on behalf of clients. Given that this was the main idea behind most crashes of crypto businesses last year, including FTX, the UK is keen on enabling strict regulation on risky loans between multiple crypto firms.
The proposal aims to focus on consumer protection and clamp down on loan activities as well as chase a “robust world-first regime strengthening rules around the lending of crypto assets, whilst enhancing consumer protection and the operational resilience of firms,” according to a statement out late Tuesday.
Andrew Griffith, economic secretary to the Treasury, noted in a statement. “We remain steadfast in our commitment to grow the economy and enable technological change and innovation — and this includes crypto asset technology. But we must also protect consumers who are embracing this new technology — ensuring robust, transparent, and fair standards.”
Additionally, the proposal aims to implement strict transparency requirements on crypto exchanges in order to enforce the publishing of relevant details and layout precise approval requirements for digital trading assets.
Given that there is more to most bankruptcies in the crypto industry than just loan services and lack of transparency, the UK government also targeted the crypto advertisements sector allowing only companies with Financial Conduct Authority (FCA) registration to proceed with their promotion while the broader crypto regime is being established.
The Regulation Is Cool But Might Take A While
Regulation is not a one-body job, as it has to go through several approval and procedures to be implemented. CNBC states, “It will likely take years before the measures are approved by Parliament.” Simply put, many things still have to be put in place before the finalization of the proposal.
Meanwhile, the Financial Services and Markets Bill, responsible for legalizing cryptocurrency assets as regulated products, is still yet to appear in the parliament. The law aims to make the country’s financial industry more aggressive post-Brexit.
Regardless, the UK taking the first step among other world leaders to regulate the crypto industry is still as necessary, according to industry experts. CEO of Zodia Custody, Julian Sawyer, told CNBC, “Having a regulatory roadmap or regulatory direction of travel is going to be super useful for the UK in terms of being a crypto hub.”
While regulations in the crypto industry are only expected to be the new normal, the cryptocurrency market still maintains composure standing steadily above the $1 trillion mark.
At the time of writing, the global cryptocurrency market capitalization sits at $1.84 trillion, nearing a $2 trillion mark as Bitcoin (BTC) and Ethereum (ETH) rallied 1.8% and 1.2%, respectively, over the past 7 days.
Featured image from Unsplash, Chart from TradingView
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