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UK looks to apply banking rules to crypto activity
Plans to strengthen rules around financial intermediaries and custodians of digital assets
Recent criminal charges against Sam Bankman-Fried, former CEO of major crypto exchange FTX, have further heightened concerns. Photo: Erika P Rodriguez/Chicago Tribune/ via Getty Images
The UK intends to regulate crypto asset activities including trading, lending and custody under the same regime as traditional financial services.
The British government is opening a consultation on a series of sweeping new rules for the crypto sector, the country's Treasury department said in a statement.
The proposed guidelines would include a requirement for exchanges to write detailed requirements on admission standards and disclosures for token issuers when listing new assets.
The plans would make crypto exchanges akin to multilateral trading facilities as operated by LMAX Group and TP ICAP – a type of trading venue for alternative assets – a person familiar with the matter said, who was not authorised to discuss it publicly.
The UK also plans to strengthen rules around financial intermediaries and custodians of digital assets, requiring all firms to meet prudential regulation and standards on data reporting, consumer protection and operational resilience.
The consultation was published on Wednesday and will seek responses until April 30.
The push to implement stricter rules in the UK comes during a period of turmoil in the crypto sector, which has been marked by a raft of high-profile collapses, bankruptcies and scandals.
Plummeting token prices and platform failures last year resulted in investors nursing billions of dollars in losses and regulators across the globe tightening their scrutiny of the asset class.
Recent criminal charges against Sam Bankman-Fried, former CEO of major crypto exchange FTX, have further heightened concerns over whether crypto companies offer sufficient customer safeguards.
Mr Bankman-Fried allegedly permitted FTX's sister trading platform Alameda Research unfettered access to customer assets for its own purposes, while also borrowing from the firm for his personal gain.
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