The UK is set to implement its first-ever set of regulations to oversee the cryptocurrency sector, with a focus on consumer protection and financial stability.
The announcement was made by the British government on Monday (30 Oct), signalling a significant step towards comprehensive cryptocurrency regulation.
The new regulations will require market participants in the crypto sector to obtain authorisation from the UK’s Financial Conduct Authority before offering services to consumers.
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The move is in response to the growing importance of crypto assets, such as Bitcoin, and the underlying blockchain technology, which have become increasingly entwined with the mainstream financial system.
The European Union has already approved a comprehensive set of rules for crypto asset markets, attracting crypto firms to establish a presence within the EU.
The government’s decision to introduce regulations is grounded in recent market events, including the high-profile collapse of US crypto exchange FTX.
These incidents have underscored the need for effective regulation and sector engagement to safeguard consumers and maintain financial stability.
The new regulations are intended to strike a balance between encouraging innovation and mitigating risks associated with the crypto sector.
Secondary legislation is expected to be presented to the UK’s parliament in the coming year. Currently, cryptocurrency firms in the UK are only obligated to have safeguards against money laundering.
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By GlobalDataA spokesperson for CryptoUK, the trade association for the crypto industry in the UK, said: “We broadly welcome the Treasury’s response and we will continue to work closely with the Government and regulators on these issues, which impact tens of thousands of jobs across the UK and continued investment into the British economy.
“In particular, we are pleased to see that the Treasury acknowledges that it would be ‘premature and ineffective’ to regulate DeFi activities currently, something which CryptoUK and its members have consistently flagged to lawmakers.”
The UK’s announcement comes at a time when the cryptocurrency market, including Bitcoin, has experienced a resurgence in value. Bitcoin’s price reached $38,872 in October 2023, the highest in nearly a year and a half, driven by speculation about the imminent introduction of an exchange-traded Bitcoin fund in the US.
