The final recommendations for regulating crypto assets were released on Monday by the UK government, which gave a thorough response to its consultation. These proposals were based on information from experts, businesses, and market events, “including the failure of FTX.”
The recommendations make forth the desire of the UK government to include some activities related to cryptocurrency assets inside the financial services regulatory purview for the first time. “The government’s position is that firms dealing directly with UK retail consumers should be required to be authorized irrespective of where they are located,” the study stated.
The memo outlined the new requirement for enterprises engaging in crypto asset activity to obtain authorization from the Financial Conduct Authority of the United Kingdom. The permission will stipulate that cryptocurrency exchanges must develop comprehensive guidelines for admission requirements and mandate disclosures when listing new assets.
No legal structure for DeFi
The report stated that DeFi regulation would not be undertaken at this stage of development, and the final plans did not address the regulation of decentralized finance.
“HM Treasury acknowledges that it would be premature and ineffective for the UK to control DeFi operations at this time, in accordance with consultation replies. As an alternative, the government will assist global initiatives by working with the FSB and other standard-setting organizations to provide information for a future domestic framework, according to the paper.
The guidelines presented in the final proposals paper will not function as a stand-alone regulatory framework; rather, they will be incorporated into the current UK market law. “The consultation has proposed to apply and adapt existing frameworks for traditional finance custodians,” stated the document.
As to the UK Treasury, the ultimate recommendations aim to fulfill the country’s desire to lead the financial services sector in terms of innovation and technology related to crypto assets.
“The proposals plan to create the conditions for crypto asset service providers to operate and grow in the UK, whilst managing potential consumer and stability risks,” the statement from the UK Treasury stated.