UK Treasury pushes cryptocurrency regulation draft, closely following the EU and US.
The UK Treasury announced on April 29 a regulatory draft for the cryptocurrency industry, aimed at providing a clear regulatory environment for exchanges, dealers, and brokers of cryptocurrency assets like Bitcoin and Ethereum, while also covering market abuse, access, and disclosure systems.
Chancellor Rachel Reeves stated at the London FinTech Innovation Summit that these new rules aim to support the country's economic growth goals, with plans to legislate this year, intending to make the UK an excellent place for investment and innovation for digital asset companies.
This proposal is built on the (Financial Services and Markets Act) passed in 2023, which grants the Treasury the power to formulate new rules for the cryptocurrency industry. The UK has fallen behind the EU in regulatory steps, where the industry-specific (Markets in Crypto-Assets Act) (MiCA) began implementation last year.
The UK government emphasized in the announcement: "Today's announcement sends a clear signal: the UK welcomes business development but will not tolerate fraud, abuse, and instability." The Treasury is open to receiving technical feedback on these draft rules until May 25 and plans to timely announce rules regarding market abuse, access, and disclosure systems.
Cryptocurrency ownership has tripled in three years; regulation aims to protect investors from fraud.
According to data from the self-regulatory industry association CryptoUK, about 12% of UK adults currently own some form of cryptocurrency, significantly up from 4% in 2021, representing a threefold increase. As the cryptocurrency ownership rate rapidly climbs, more and more UK citizens are exposed to risky enterprises and fraud, prompting the government to accelerate the establishment of a regulatory framework.
CryptoUK Deputy Director Ian Silvera stated in a statement that the government's announcement is "very welcome and a significant victory for crypto companies." However, he added that the industry could also benefit from regulatory clarity regarding liquidity staking and decentralized finance (DeFi).
Silvera believes: "Although the Financial Conduct Authority (FCA) has made good regulatory progress and released its crypto roadmap at the end of last year, the UK government committed to becoming a global crypto hub as early as 2022, and progress has been slow since then. However, as the Chancellor recognizes, the mainstreaming of the industry has continued, with now 12% of UK adults owning some form of cryptocurrency." The FCA plans to release final rules on cryptocurrency by 2026, laying the groundwork for the formal implementation of the UK's regulatory framework.
UK-US collaboration promotes cryptocurrency innovation; the UK plans to build a global digital asset hub.
The UK Treasury stated in a statement released on April 30 that it plans to work with the United States to better support the innovation of the thriving cryptocurrency industry. Chancellor Reeves expressed her desire to "make the UK the best place in the world for innovation," which includes supporting companies engaged in cryptocurrency business. "Companies providing services for cryptocurrencies like Bitcoin and Ethereum will be subject to new, clear rules that enhance investor confidence and drive growth through reform plans," said Reeves in the statement.
The UK Treasury is willing to cooperate with the US government to support the digital asset industry, following Reeves' recent meeting with US Treasury Secretary Scott Bessent in Washington, where they discussed aspects of cooperation regarding digital asset regulation. They also discussed proposals related to digital assets put forward by SEC Commissioner Hester Peirce, including the idea of a UK-US cross-border regulatory "sandbox."
The UK Treasury stated that discussions between the Treasury of the UK and the US will continue. Reeves will again talk with the US government about "supporting the use of digital assets and responsible growth" at the planned UK-US financial regulatory working group meeting.
Earlier this year, the UK Treasury had already shown a willingness to modify existing rules to benefit digital asset companies. In January, it amended the (2000 Financial Services and Markets Act), allowing cryptocurrency companies operating in the UK and providing staking services to no longer be subject to strict regulation. Reeves also announced that a broader strategy for financial services growth and competitiveness will be released on July 15, with fintech marked as a top priority sector for long-term growth.
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'12% of Britons own cryptocurrency! The government plans to regulate exchanges; can it rectify the chaos in the crypto world?' This article was first published in 'Crypto City'.
