CryptoUK today published its detailed response to the UK Treasury’s (HMT) consultation paper on the future regulatory regime for cryptoasset financial services.
Consulting proposals include strengthening the rules for cryptocurrency trading platforms and a robust world-first crypto lending regime. Consultations began in February and will conclude on April 30, 2023. When it is over, the UK government will consider the feedback and work to formulate a response to the comforting recommendations.
Commenting on the consultation, CryptoUK director of operations Su Carpenter said:
“We believe that the regulatory regime for crypto assets is key to making the UK competitive as a destination for the rapidly growing crypto asset market.”
“Given the cross-border nature of the crypto asset industry, we support a ‘same risk, same regulatory outcome’ approach and support the UK’s continued commitment to developing and promoting international standards.”
Carpenter further said:
“We welcome the UK’s leading role in promoting a safe and orderly crypto asset market, as this will support the further development of the crypto industry and the UK’s competitiveness as a destination for crypto companies.”
“We welcome the active engagement of HMT and the Financial Conduct Authority (FCA) with the industry in preparing the UK regulatory framework for crypto assets.
We recommend taking a broader view of all the drivers driving the UK to achieve its ambitions to become a global hub for the crypto industry, including applying FinProm rules proportionally to trading venues, addressing concerns over the debanking of cryptocurrencies, addressing asset class nuances industry and progressive tax policy. “
Su also detailed CryptoUK’s specific proposals for the HMT regime.
Predictable and transparent registration process:
“We support an indicative timetable for the entire application process and welcome the FCA’s detailed, clear and up-front guidance on industry expectations, similar to the recent feedback statement on good and bad quality applications under the Money Laundering Regulations.”
Practical rules on disclosure:
“We believe that disclosure requirements should provide consumers with the correct information and not place a disproportionate burden on trading venues. We also recommend international alignment with other jurisdictions to avoid multiple disclosure standards.”
Custody and safekeeping of client assets is fundamental to building consumer trust:
“Trading venues should separate crypto assets held on behalf of clients from their own and make them verifiable through regular on-chain checks.”
Setting the global standard for safe, transparent and orderly markets:
“We believe the FCA can play a leading role in promoting safe, transparent and orderly markets by adopting a phased approach in which trading venues are first responsible for enforcing market abuse rules on their own Global adoption of trade surveillance tools”
Create an asset reference stablecoin class:
“We acknowledge that only fiat-backed stablecoins may be considered and/or permitted for sale as stablecoins or e-money. However, we believe that the broader stablecoin category including algorithmic stablecoins and crypto-backed tokens Or regimes may be prudent and will reflect the reality that these cryptoassets continue to have use cases within the cryptoasset ecosystem, such as trading pairs.”
DeFi is still nascent and unsystematic and may require new approaches:
“We support HMT’s patience in seeking to develop a prescriptive framework for DeFi regulation before any international standards and approaches emerge. We will support consulting the industry individually in identifying and developing industry best practices and potentially novel regulatory approaches.”
Clarify the regulatory treatment of Staking:
“Given its growing importance to the cryptoasset industry, we will support industry consultation on the regulatory treatment of staking in the short term.”
Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.