BlocksInform
The UK has proposed a global framework for regulating centralised crypto exchanges and entities such as depositories.
They come up with proposals for crypto trading platforms, intermediaries, crypto loans, and many other things.
Overall the aim is to facilitate crypto activities, while preventing abuses like FTX or Celsius which sold customers’ bitcoin and eth to prop up its own token. Treasury Secretary Andrew Griffith is quoted as saying:
"We remain committed to growing the economy and supporting technological change and innovation, including cryptoactive technology.
But we also need to protect consumers who adopt this new technology, by guaranteeing strong, transparent and fair standards."
With respect to crypto trading platforms and middlemen, a lot is as you would expect with the only attractive aspect for crypto loans being that they want to share information with the CRF regarding guarantee levels in order to manage risk.
For crypto custodians, and presumably that can include exchanges, they require that customers’ assets legally remain those of the customer even in the case of insolvency, in addition to measures to be taken “for redress in the event that cryptoassets held in custody are lost.”
Decentralized finance (DeFi) is seemingly left out with the Treasury stating that “some parts of the value chain may not be practical to regulate, for example the underlying protocol if that has become truly opensourced and decentralised over time.”
The most interesting part of this proposal is on crypto issuance where UK is breaking ground to some extent with this document by seemingly making a distinction between what we are calling crypto securities and traditional securities.
They generally prohibit ICOS and public offerings unless they are listed on a crypto trading platform or a regulated market, which is a "public offering platform" intended to facilitate crowdfunding.
A prospectus would be required with the information to be provided and a certain degree of due diligence to verify that information.
Crucially, it is the trading venue that administers these requirements with the proposal stating:
“The FCA would include principles in their rule book for admission and disclosure
requirements that cryptoasset trading venues would then be responsible for administering.”
It's self-regulatory to a certain degree, unlike the United States, FCA will not be required to pass judgment on the appropriate prospectus, it's more what trading platforms do.
Naturally, there is a distinction between cryptos such as Bitcoin, which are not subject to these requirements, and tokens that are more related to securities.
This proposal therefore appears to suggest that Coinbase's process of conducting a thorough review prior to registering an asset, meets the FCA's guidelines, strike the appropriate balance.
"These admission documents are not expected to take the same form as a traditional prospectus giving specific features and profiles of crypto-asset investors,' the CRF said.
The open proposal to consult with him today to continue until April 30, and then the bill could follow.
It would be a regulated crypto market in the United Kingdom, taking into account certain risks related to fiduciary relations when an entity is in a position of confidence, without interfering with real cryptography as well as intelligent contracts.
