In preparation for the regulation of cryptocurrencies in the United Kingdom, His Majesty’s Treasury has released the long-awaited consultation document. The paper is 80 pages long and covers a range of topics including algorithmic stablecoins as well as nonfungible tokens or initial coin offers (ICOs).
The Treasury claimed that the recommendations were made to position the United Kingdom’s financial sector in the forefront for crypto. It also sought to avoid harsh control measures, which have been popularized worldwide during crypto winter. This is the purpose of the proposals.
Treasury declared that there would be no separate regulatory system for cryptocurrency, since it will be governed within the Financial Services and Markets Act 2000 of the United Kingdom (FSMA). It is intended to make crypto and traditional financial systems more competitive. The goal is not to make crypto and conventional financial systems equal. Financial Conduct Authority The FCA, Britain’s main financial regulator will amend the laws of the FSMA to allow digital assets to be traded on the market.
One of the most annoying consequences of this ruling is that participants in the cryptocurrency market will have to go through the registration process all over again. They had to previously go through the process to obtain a license under the FCA’s licensing framework. However, they will now be evaluated against a wider range of indicators.
The good news is that cryptocurrencies-related organisations won’t have to publish market data as often as they do in traditional banking. The exchanges, on the other hand would be required to store and make it available at all times.
Contrary to many of its overseas counterparts, the Treasury Department decided not to ban the use of algorithmic stabilitycoins. As a result, they will be classified as “unbacked cryptocurrency assets” and not “stablecoins”. However, the term “stable” is not allowed to be used in marketing for algorithmic coins.
The consultation document states that a new regulatory framework would be developed for crypto lending platforms. It should require lenders to consider acceptable collateral values and contingency plans in the event of the collapse of their main market counterparties.
“The government should encourage greater engagement with the business community to create a comprehensive, risk-based framework in line with global best practices.
Nick Taylor, who heads the EMEA region of the global cryptocurrency exchange Luno’s public policy, believes that this sector is now at a crucial moment. He stated that while there are still many steps to be taken before new laws can be implemented, the government’s ambition is encouraging.
The consultation will end on April 30, 2023. The British government welcomes feedback from all parties involved, including cryptocurrency companies, financial institutions and trade associations, representative bodies and academic institutions.