Regulation

Cryptocurrency, once considered a speculative investment for the tech-savvy and risk-taking, has become a mainstream form of financial asset in recent years. The market’s explosive growth has attracted both legitimate investors and fraudulent businesses looking to take advantage of the lack of regulation in the industry. In response to the reckless business practices that have emerged and contributed to the downfall of cryptocurrency exchange FTX, the U.K. government has taken steps to reign in the wild west of cryptocurrency and bring order to the chaos.

On February 6, the U.K. government launched a widely-anticipated industry consultation that proposed a number of measures aimed at crypto regulation. The proposals seek to bring regulation of the industry in line with that of traditional financial firms and protect both investors and the operational resilience of companies. One major proposal is to strengthen rules targeting financial intermediaries and custodians that store cryptocurrencies on behalf of clients, cracking down on risky loans made between multiple crypto firms and the lack of due diligence done on counterparties.