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The UK publishes a call for evidence on proposals to create a financial services regulatory regime for crypto-assets and confirms its approach to setting up financial promotions regime for crypto-assets Bird & Bird

Further consultations are expected in relation to tokenisation of assets and use of distributed ledger technology (“DLT”) in financial market infrastructure (“FMI”), including the FCA developing a sandbox for testing DLT solutions for FMIs. Strengthening customer journey requirements for authorised firms (e.g. through significantly limiting direct offer financial promotions of certain mass market investments, which will in due course include qualifying cryptoassets, to retail customers). It reminds would-be traders that cryptoassets are unregulated and high-risk, which means people are “very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”. This approach delivers on the original policy intention of the measure to promote innovation, enhance consumer protection and ensure that cryptoasset promotions can be held to equivalent standards as promotions of financial services products with similar risk profiles. The consultation discusses the various challenges with regulating for market abuse in cryptoassets among some of the reasons includes the global nature of crypto assets. However, HMT considers there is value in enabling authorities to sanction market abuse behaviour which is hoped overtime will be enhanced through new technologies, international cooperation and introducing criminal offences.

  • Critics of CBDCs fear that they might be used to track the spending patterns and financial behaviour of individuals, although the government has stated that no such records will be kept.
  • Cities in the UK lag behind those in Europe in terms of paying with cryptocurrencies, according to new data, writes Mark Hooson.
  • The announcement was part of a package of measures which also included working with the Royal Mint on a Non-Fungible Token and assembling a Cryptoasset Engagement Group to work more closely with the industry.
  • Within the call for evidence, the UK government weighed in on the debate surrounding how and when securities law should be applied to cryptocurrencies.

Given the high rejection rate, firms applying for registration should take note of the FCA’s feedback on good and poor applications and consider seeking legal advice in advance of submitting an application. To help you navigate and control risk in a challenging legal landscape, https://xcritical.com/ we have collated a range of key advice and guidance. To help you navigate regulatory requirements across regions, we have collated a range of key cross-border content. Keep up to speed on legal themes and developments through our curated collections of key content.

July: Crypto Ownership Numbers Double Year On Year

The Government will receive feedback on the Consultation and we would expect a further consultation to be published by the Government on these proposals. It would mean the FCA would be able to regulate new activities once the FCA are given power to create tailored rules. The implications of the high-profile collapse of firms like FTX have also been taken into consideration within the Consultation which has brought to light important questions on conduct of business requirements, operational resilience, safeguarding and conflicts of interest. The received wisdom of “cash is king” has long been declining and the world is gradually moving to a more digitised banking space…

The UK has always been at the heart of both financial and technological innovation, but traction has also been seen in some EU member states, such as France and Malta, which have implemented specific legislations dealing with cryptoasset activities. Luxembourg has also implemented rules that permit the storage of securities on a blockchain and it is considering introducing the concept of a ‘token’ into the legal system as a next step. In a similar vein, Poland has deployed regulation which allows for joint-stock companies to have their shares stored on DLT software. Lastly, some jurisdictions, such as Finland and Croatia, have gone further in their implementation of the Fifth Anti-Money Laundering Directive by taking it as an opportunity to expand financial regulation of cryptoasset in one consolidated act. In parallel, in mainland Europe both the European Banking Authority and the European Securities and Markets Authority issued advice to the European Commission on how to best deal with cryptoassets.

Crypto Regulation – What Crypto Exchanges and VASPs Need to Know About Upcoming UK FCA Regulation

The reforms also aim to help to achieve the UK Government’s stated goal of the jurisdiction of England and Wales becoming a global hub for digital assets, and in particular, for crypto-tokens and crypto-token systems. The regulator says none of the cryptoasset firms registered with it have been approved to offer crypto ATM services. This means that any of them operating in the UK are doing so illegally and consumers should not be cryptocurrency regulation in the UK using them. The FCA’s Temporary Registration Regime for cryptoasset businesses was set up in December 2020. This allowed existing cryptoasset firms, whose applications had yet to be assessed by the regulator, to continue trading providing they had applied to register before 16 December of that year. NFTs are digital assets that represent real-world objects, such as unique works of art or mementoes of memorable sporting moments.

cryptocurrency regulation in the UK

NFTs, along with cryptocurrencies such as Bitcoin, use blockchain, a multi-point computer ledger designed to safely store digital data. Mercuryo research suggests there is strong appetite for crypto regulation in the UK. According to the firm’s data, 68% of British people say they want to see cryptocurrency become more regulated, while 61% worry about falling victim to a cryptocurrency scam, and 47% feel their money is safer in other forms of investment than in a cryptocurrency.

Cryptocurrency regulation UK

The Government will introduce new statue to give effect to the new cryptoasset financial promotions regime including the bespoke exemption. However, whilst it is now accepted that cryptocurrency is property in English law, it still remains unclear as tohow it can be classified as property in accordance with Colonial Bank. It is for this reason that the Law Commission has recommended the creation of a third category of property which covers digital assets explicitly. They have gained popularity in recent years as a medium of exchange and the largest cryptocurrency exchanges now handle transactions totalling billions of dollars each day.

cryptocurrency regulation in the UK

While the EBA’s advice focuses on anti-money laundering practices and looks at cryptoassets with a focus on monetary regulations, ESMA looks at cryptoassets through the lens of regulations governing financial instruments. Making sense of bitcoin, cryptocurrency and blockchain Understand how Blockchain works, what cryptocurrency is and the potential blockchain applications beyond Bitcoin and cryptocurrency to improve business… Crypto Center The rapid rise of crypto is changing the global financial landscape forever, creating both risks and opportunities for new and existing players. Ten questions every board should ask about cryptocurrencies Guidance to help boards engage in constructive dialogue about the potential strategic fit of cryptocurrencies.

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