Britain’s first cryptocurrency regulations set ‘strong’ standards

Britain’s first cryptocurrency regulations set ‘strong’ standards

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  • February 1, 2023
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After the collapse of the FTX crypto exchange, Britain’s finance ministry is planning restrictions for digital currency assets.

LONDON: Following the collapse of cryptocurrency exchange FTX last year, which left millions of users nursing billions of dollars in losses, Britain’s finance minister intends “strong” controls for crypto assets.

Currently, there is no global regulation of cryptocurrencies; businesses are only required to conduct checks to stop money laundering. As “black money” circulates throughout the industry, the Financial Conduct Authority (FCA) of Britain has stated that more than 80% of licence applicants were unable to demonstrate that they could do this correctly.

Financial Services Minister Andrew Griffith stated in a statement on Tuesday that the draught rules, which are scheduled to be released on Wednesday, would maintain strong, transparent, and fair standards, commensurate with the approach to traditional finance.

According to Griffith, “We remain steadfast in our resolve to expand the economy and foster technological development and innovation, including crypto-asset technology.

The new regulations follow a succession of bankruptcies in the industry in 2022 that were caused by increased loan rates and which reduced the value of the cryptocurrency market by $1.4 trillion. The most popular cryptocurrency’s price fell by 60%.

The market collapse undermined investor trust in cryptocurrencies, but interest in the underlying technology, most notably blockchain, for other applications like payments, has not diminished.

The proposed measures will be the subject of a three-month public consultation before the FCA makes proposals for specific rules.

The government said that its strategy will reduce the biggest risks in the industry.

According to the government, “these recommendations will put the onus on crypto trading venues to provide the specific content specifications for admission and disclosure documents, ensuring crypto exchanges have fair and strong standards.”

Financial intermediaries that assist transactions and custodians who hold client assets will be subject to regulations.

The failure of FTX and other exchanges led to calls for industry regulation to safeguard investors. Regulators are focusing on cracking down on “crypto conglomerates,” which integrate financial services like lending, trading, and custody under one roof without the usual regulatory safeguards.

The first set of crypto laws being finalised by the European Union.

While the new legal framework is being implemented, firms that have already been granted FCA authorization will be permitted to temporarily issue their own promotions, the ministry announced.

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