While the UK government is serious about the introduction of the new rules, if it becomes law, it will take some years to complement and implement its provision.
The United Kingdom is advancing its role in the regulation of the digital currency ecosystem as it recently unveiled its new guidelines to oversee the industry. As reported by CNBC, one major highlight is to curb the activities of crypto trading platforms in a bid to curb the series of events that stirred the implosion of the FTX Derivatives Exchange.
According to the proposed regulation, the regulators in the United Kingdom will focus on curbing high-leveraged borrowing on digital currencies that have characterized the digital currency industry. Considering the volatility in the industry, these trading services are notably high-risk and can predispose Virtual Asset Service Providers (VASPs) to losses.
The reporting standards for crypto trading platforms will also be tightened and the UK government will seek to curb the operational excesses as was seen in FTX. One of the major reasons why FTX imploded was because the founder and former Chief Executive Officer, Sam Bankman-Fried bypassed the exchange’s management to take money from the exchange to fund unproductive trading activities with sister trading firm Alameda Research.
A major goal for UK regulators will be to bring the guiding regulations in the industry at par with traditional financial players.
“We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology,” Andrew Griffith, economic secretary to the Treasury, said in a statement. “But we must also protect consumers who are embracing this new technology – ensuring robust, transparent, and fair standards.”
While there is some obscurity to the number of FTX creditors from the United Kingdom, the exchange’s fall has introduced a renewed sense of urgency to regulators whose core goal is now to protect the integrity of their financial markets as well as the interest of consumers.
Crypto Regulation in the United Kingdom: Other Highlights
The proposed regulation of the crypto ecosystem in the United Kingdom will also encompass the advertisement of these products to the public. Regulators want adverts for crypto projects to contain certain disclosures that will inform consumers of the risks attached to the project.
While the UK government is serious about the introduction of the new rules, if it becomes law, it will take some years to complement and implement its provision.
“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,” Julian Sawyer, CEO of Standard Chartered-backed crypto custody services firm Zodia Custody.
Top industry leaders are advocating for futuristic crypto regulations and the call by stakeholders has pushed the European Union to pass the Markets in Crypto Assets (MiCA) bill last year. Besides the UK and the EU, American regulators are also working towards floating a comprehensive multi-agency regulation following the Executive Order issued by President Joe Biden back in March 2022.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
