InfoBytes Blog
UK Government to regulate cryptoassets more strictly under a new regulatory regime
On October 30, the HM Treasury of the UK Government released a report titled “Future Financial Services Regulatory Regime for Cryptoassets,” confirming its plans to regulate digital assets more strictly. The regulatory framework includes descriptions of requirements for the admission of digital assets to a trading venue, including disclosure documents. To make cryptocurrencies subject to the FCA’s rule-making powers, the HM Treasury expanded the definition of “specified instruments” to include digital currencies, but not its definition of “financial instrument.”
The UK Government created the report based on stakeholder feedback on an extensive survey on cryptoassets. The report summarizes responses to 51 survey questions and provides explanations regarding the UK government’s intentions to proceed with the framework. The report outlines how the UK can attract more crypto businesses while also protecting consumer interests. Topics include, among other things, (i) confirmation that the proposed regime does not intend to capture activities relating to cryptoassets which are specified investments that are already regulated; (ii) information regarding the future FCA authorization process for cryptoasset activities; (iii) the UK government’s support for the use of publicly available information to compile appropriate disclosure and admission documents; and (iv) acknowledgment of the potential need for a staggered implementation for cross-venue data sharing obligations. The report recognizes the rapidly evolving nature of the crypto sector and emphasizes that “the government continues to consider that developing a fully bespoke regime outside of the FSMA framework would risk creating an un-level playing field between cryptoasset firms and the traditional financial sector.”
Any legislative changes in response to this report on how the UK Government regulates cryptoassets will occur in 2024, “subject to Parliamentary time.”