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Treasury reveals proposals to regulate cryptocurrency | Science & Tech News

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The Treasury Department has unveiled proposals to regulate cryptocurrencies following widespread calls for action following the dramatic collapse of one of the world’s largest exchanges.

The government has promised a “robust” approach to digital assets consistent with traditional finance, saying it wants exchanges to have fairer and more rigorous standards. Under the plan, crypto platforms will be responsible for defining the requirements that a currency must meet before being allowed to trade. Exchanges are also responsible for safely facilitating transactions and keeping client assets safe.

This comes after the Deputy Governor of the Bank of England told Sky News that cryptocurrency trading was “too dangerous” to stay outside mainstream regulation. In light of the sudden bankruptcy of cryptocurrency platform FTX Sir John Cunliffe described markets as ‘incredibly volatile’ Investors said they needed more protection.

About 80,000 UK-based customers were affected by the collapse of the world’s second-largest cryptocurrency exchange.

“regulating crypto before systemic problems”

Is the government planning enough?

Labour said the proposal came too late as the crypto industry tried to win back the confidence of shaken investors. Since the collapse of FTX, Bitcoin, the world’s largest token, has suffered broader market turmoil. Falls to 5-month low major exchange Coinbase has cut its workforce by 20%. Treasury Secretary Andrew Griffiths said the government is still working to make cryptocurrencies a reality, but stressed the need to “protect consumers who are adopting this new technology.”

The plan will be submitted to consultations first, but the Treasury Department claims the regulation is a “world first” and should arrive before the EU’s planned cryptocurrency bill in 2024.

Meanwhile, the Treasury Department has announced that it will introduce a limited-time exemption to allow more crypto firms to issue promotions.  Companies registered with the Financial Conduct Authority for anti-money laundering purposes will be allowed while broader regulations are introduced.

What is the main purpose of cryptocurrencies?

“We have waited a long time”

Keystone Law partner Louise Abbott, a cryptocurrency fraud expert, welcomed the proposal. She told Sky News that cryptocurrencies are “very attractive to scammers” because they are unregulated.

“We’ve waited a long time in this industry,” she said. “I deal with fraud and have witnessed a dramatic increase in cryptocurrency scams and scams over the past decade. I received inquiries from people on a daily basis.”

Abbott said he hopes the regulation will come into effect as early as the summer, adding that it is meant to increase market scrutiny for both exchanges and investors. Major industry players, including Binance chief Changpeng Zhao, Who saw his platform banned in the UK in 2021 and Coinbase’s Brian Armstrong have previously welcomed the possibility of increased regulation. “Investors won’t invest like we’ve seen unless we’re in a safer environment,” Abbott added.

Varun Paul, former head of the Bank of England’s fintech division and now of crypto infrastructure provider Fireblocks, also described the plan as a “positive step.” He told Sky News that the industry’s turmoil meant there was a need for “clear rules” and expressed hope that UK regulation would do its job while fostering innovation. bottom.

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