UK Crypto Proposal Would Tighten Screws on Crypto Even Harder
The proposal emphasizes a need for increased communication between regulators and crypto firms in order for the UK to establish itself as a “competitive location for sustainable finance”
Drop of Light/Shutterstock.com modified by Blockworks
Just days after highlighting how difficult it is for crypto companies to get the green light to operate in the United Kingdom, the country proposes new, stricter guidelines for approval.
In an 82-page proposal published Wednesday, the UK Treasury highlights a need for increased communication between regulators and crypto firms in order for the country to establish itself as a “competitive location for sustainable finance.”
The document covers a wide range of topics, including NTFs, bitcoin mining and stablecoins.
“Former chancellor Philip Hammond has declared that the UK needs to take measured risk in order for the UK to excel as a leader in cryptocurrencies, but for that the community needs measurements to abide by,” Katharine Wooller, business unit director at digital asset protection firm Coincover, told Blockworks.
“If we want to get ahead as a global leader in digital assets, we need to stop assessing firms, and start working with them to develop a regulatory framework.”
Crypto exchange Binance head Changpeng “CZ” Zhao tweeted he was “happy” to see progress being made toward “progressive” regulation.
The proposal comes as more crypto companies urge for clear and achievable guidelines around digital assets.
The UK’s Financial Conduct Authority (FCA) said last week only around 15% of applicants are successful in securing a spot on the agency’s cryptoasset firm registry, a must for any business hoping to conduct operations in the country.
The Treasury is seeking to take the registration process a step further, requiring crypto firms — even those already registered with the FCA — to apply for authorization under the new “Financial Services and Markets Act (FSMA)-based regime.”
The new FSMA rules would be stricter on anti-financial crime and anti-money laundering regulations, the proposal added.
UK regulators may still fear crypto
The suggestion is unlikely to go over well with companies who already went through the rigorous process of registering with the FCA. Only 41 firms have successfully done so to date.
The FCA cited concerns with personnel leading various companies as reasons for denying many applications.
“It is difficult to judge whether leading personnel in firms ‘lack appropriate knowledge, skills and experience’ when it is judged against a lack of transparency and an absence of benchmarks and guidance from the FCA,” Alexander Carter-Silk, cryptocurrency solicitor at Keystone Law, told Blockworks.
“There is no clear explanation as to what is applicable to crypto asset businesses, possibly because the FCA is fearful of the new technology.”
The period for public comment on the proposal will end on April 20, 2023, the government said.
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