UK Reveals New Regulations for Crypto Assets, Excludes DeFi for Now
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The UK government has unveiled its comprehensive response to a consultation on crypto asset regulation. Informed by input from companies, experts, and market events, including the FTX incident, the final proposals were released on Monday.
These proposals mark the UK government's intent to include several crypto asset activities within the regulatory scope of financial services for the first time. The government's stance is that companies dealing directly with UK retail consumers must obtain authorization, regardless of their global location.
The document specifies that entities engaged in crypto asset activities will now require authorization from the UK's Financial Conduct Authority. Crypto exchanges will be mandated to establish rigorous admission standards and disclose information when listing new assets.
Notably, the final proposals do not cover the regulation of decentralized finance (DeFi), as the government deems it premature and ineffective at this phase. Instead, the UK government plans to collaborate at the international level through organizations like the FSB and standard-setting bodies to shape future domestic DeFi regulations.
These new rules, as outlined in the final proposals, will be incorporated into existing UK market laws rather than forming a distinct regulatory framework. The consultation has proposed adapting existing frameworks used for traditional finance custodians.
The UK Treasury stated that these final proposals aim to position the UK as a leading hub for crypto asset technology and innovation within the financial services sector. The objective is to create an environment where crypto asset service providers can thrive in the UK while mitigating potential risks to consumers and financial stability.
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