Britain’s finance ministry laid out its first set of rules to regulate cryptoassets on Wednesday, saying ongoing turbulence in the sector and the collapse of exchange FTX highlighted risks that need addressing.
Cryptoassets, such as bitcoin BTC=BTSP, have little direct regulation globally, but regulators are taking a closer look after the downfall of FTX last year, which left millions of investors nursing losses totaling billions of dollars, some of them in Britain
“Our view is that this reinforces the case for clear, effective, timely regulation and proactive engagement with industry,” Financial Services Minister Andrew Griffith said in proposals put out to public consultation.
“This includes a proposal to bring centralized cryptoasset exchanges into financial services regulation for the first time, as well as other core activities like custody and lending,” Griffith added.
The new rules would cover crypto-related admission to a trading platform, making a public offer, executing payment transactions or remittances, arranging deals, operating a platform, custody, and mining transactions, or operating a node on blockchain.
The rules will cover crypto firms in Britain or those providing services to the UK. Firms would need a license, along with minimum capital and liquidity requirements.
It would be up to the Financial Conduct Authority to decide if a foreign operator needs a physical presence in the UK.