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UK Eyes Blockchain Security Measures Amid Crypto Boom
As the UK government looks to regulate the booming crypto and asset tokenization industry, a new regulatory framework for crypto assets has been proposed by HM Treasury. The Future Financial Services Regulatory Regime for Cryptoassets document outlines the key goals, prerequisites, and requirements for regulating crypto assets in the country.
Increasing Popularity of Crypto Assets
According to HM Treasury, approximately 5-10% of adults in the UK own crypto assets, an increase of 100% over the past few years. Despite a decline in the market by 75% last year, several lending firms and trading platforms have failed, including Celsius Network and Voyager Digital.
Proposed Framework
The proposed framework tackles key issues such as the classification of crypto assets in the UK and possible ways to regulate them. HM Treasury suggests that the closest parallel to the creation, issuance, and distribution of crypto assets exists in the securities market. However, regulating them as securities is challenging due to their creators’ anonymity and lack of control over the created assets.
Multilateral Trading Facility (MTF) Model
To address this issue, HM Treasury proposes a multilateral trading facility (MTF) model for admitting crypto assets to trading venues. The FCA will prepare a list of principles and requirements for asset admission, while crypto trading platforms will prepare detailed disclosure documentation and content requirements.
Key Requirements
- Each trading venue willing to list an asset will need to perform due diligence on the entity that issues the asset or accept all responsibility as the issuing entity.
- Public offers of crypto assets, including initial coin offerings (ICOs), will be regulated by the Financial Conduct Authority within the existing framework.
Industry Reaction
The proposed document has sparked heated discussions among law consulting firms, with some expressing their support for the regulation. The UK Jurisdiction Taskforce of LawtechUK believes that clarity in regulation is needed to accelerate the acceptance of blockchain and crypto technology. Another leading legal company, Arthur Cox, agrees that a defined regulatory framework will help dispel uncertainty around cryptocurrency assets.
Investment Solutions
For businesses looking to enter the UK market with debt or equity securities tokenization platforms, LenderKit offers white-label crowdfunding software solutions that can help speed up the process without excessive expenses. The platform’s integrations with third-party services, including tokenization, digital signatures, payment solutions, and identity verification providers, make it an attractive option for those looking to establish a presence in the UK crypto market.
Book a Virtual Tour or Contact LenderKit
To learn more about LenderKit’s investment solutions, book a virtual tour or reach out to their fintech strategist.