Government set to change crypto legislation

HM Treasury has announced that legislation to promote cryptoassets to the Financial Conduct Authority (FCA) will be put in place once parliamentary time permits.  

Approximately 2.3 million people in the UK are believed to possess a cryptoasset such as digital coinage or non-fungible tokens (NFTs). However, the Treasury stated that comprehension of the technology is on the decline, ‘suggesting that some users may not fully understand what they are buying’.

Action has been taken by the Advertising Standards Authority against a number of promoters for their shortcoming in highlighting the risks of cryptoasset investments. 

In responding to a conference, the Treasury reports that qualifying cryptoassets will be promoted depending on FCA rules, alongside those applying for stocks, shares, and insurance products.  

The chancellor of the exchequer, Rishi Sunak MP, noted ‘we are ensuring consumers are protected, while also supporting innovation of the cryptoasset market’.

Government policy on cryptoasset management is guided by the Cryptoassets Taskforce, which was established in 2018, 10 years after the emergence of Bitcoin. 

The new guidelines on promotions will be put in place by secondary legislation in order to modify the Financial Promotion Order, which outlines the investments and activities in accordance to the financial promotion regime. Under the Financial Services and Markets Act 2000, a business is not permitted to promote a financial product without authorisation by the FCA or the Prudential Regulation Authority, or the content of the promotion is authorised by a firm which is. Firms that intend to promote such investments and activities must abide by rules that financial promotions should be clear, fair, and non ambiguous.

It has been announced by HM Treasury that legislation will be enacted once parliamentary time allows.

Senior associate at blockchain specialist firm Ontier, Simon Cohen, stated:  ‘The Treasury’s announcement is a clear and welcome indication that the Wild West days of digital assets are coming to an end. But the devil is always in the detail, so we look forward to reviewing the government’s draft bill once published.’