Britain’s finance ministry said it would move ahead as proposed in a February public consultation, requiring companies undertaking crypto asset activities to be authorised by the FCA, although it gave no start date
The UK said on Monday it would legislate to implement its first set of rules to regulate the crypto sector, requiring market participants to be authorised before they can offer services to consumers.
Crypto assets remain a small part of the world’s financial system, although the price of bitcoin has recuperated after the failure of crypto exchange FTX raised concerns about links to mainstream finance and harms to consumers.
The EU has already started deploying the world’s first set of comprehensive rules especially for crypto asset markets in June, which are attracting crypto companies keen for regulatory certainty to set up base in the EU.
Britain’s finance ministry said it would move ahead as proposed in a February public consultation, requiring companies undertaking crypto asset activities to be authorised by the FCA, although it gave no start date.
The rules, which draw lessons from the FTX failure, focus on crypto assets, like bitcoin, and the underlying distributed ledger technology (DLT) or blockchain that underpins the sector, and seen as promising for uses like the settlement of securities.
The government’s position is that companies dealing directly with UK retail consumers should be required to be authorised regardless of where they are located, the ministry stated.
The rules cover the offering of a crypto asset, operating a trading platform, swapping crypto assets for currencies like sterling, arranging investments and lending in crypto assets and safekeeping or custody.
The ministry said the new rules will be brought under market law, instead of a standalone regime.
It is not likely that crypto regulation will be easily shoe-horned into the present regulatory framework, said Jonathan Cavill, a lawyer at Pinsent Masons. The reality is that as the market develops fast, the UK runs the risk of being left behind if it fails to attract crypto businesses.