United Kingdom Finance Ministry proposes new crypto regulations, focus on consumer protection

• The UK Treasury published the consultation paper on Wednesday, requesting feedback from industry members and experts.
• The new rules include setting up a regime for cryptocurrency lending platforms.
• FTX collapse has been cited as one of the biggest reasons for the sudden requests for more rules and regulations.

United Kingdom needs to catch up when it comes to establishing a footing in crypto regulation. Formerly part of the European Union, the UK is still looking into consultation while the bloc is already on its way to approving the Markets in Crypto Asset regulation (MiCA) bill. This could drive the government to push forward with the Financial Services and Markets Bill as well.

United Kingdom wants more rules

In a consultation paper published on Wednesday, His Majesty’s Treasury is seeking feedback from experts in the crypto space. Their feedback will be used in improving the rules that are focused particularly on consumer protection in addition to turning the UK into a crypto hub.

Among the new proposed rules, the focus on improving market integrity and operational resilience of crypto companies has been stressed. Additionally, the new rules will target financial intermediaries to establish a regime around cryptocurrency lending. In a press release pertaining to the same, the economic secretary to the Treasury, Andrew Griffith, said,

“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.”

One of the biggest reasons behind the sudden discussion of establishing more rules for the crypto space is the collapse of the cryptocurrency exchange FTX and its affiliated 130 companies. 

These rules are expected to become a part of the upcoming Financial Services and Markets Bill. Set to be voted upon in April, the bill is aimed at strengthening crypto regulation in the country.

Furthermore, the Treasury announced that it would be enabling any cryptocurrency company registered with the country’s financial regulator to promote itself as long as the discussions continue. This came despite UK’s harsh stance on crypto advertising.

MiCA is on its way

The European Union, the former home of the United Kingdom, is inching closer to approving its crypto regulation bill, MiCA. This bill will focus significantly on the licensing of crypto companies, which is a crucial part of the space at the moment.

Earlier this month, in order to minimize abuse of the MiCA bill, another member of the Bloc, France, accepted the amendment to push the cut-off date for crypto firm registration to January 2024. This will save the country from companies taking advantage of the grandfather clause of MiCA, where companies won’t have to gain a full license by 2026.