UK is set to introduce crypto regulations ahead of 2024 general election

The UK government has confirmed its plans to regulate the crypto industry with formal legislation by 2024, ahead of the next general election. The government published its response to a consultation paper issued earlier this year, which outlined recommendations on how the crypto industry should be regulated.

The government said it intends to bring several cryptoasset activities under the same regulations that govern banks and other financial services firms. These include stricter rules for exchanges, custodians, and crypto lending companies, as well as a market abuse regime and a disclosure framework for cryptoasset issuers.

The government's proposals aim to protect consumers and grow the economy by harnessing the potential benefits of crypto technologies while mitigating the risks posed by the volatility and vulnerability of the sector.

Andrew Griffith, Economic Secretary to the Treasury, stated: "We remain steadfast in our commitment to growing the economy and enabling technological change and innovation, including cryptoasset technology." However, we must also protect the customers who are adopting this new technology by enforcing strong, clear, and fair norms.

The UK is one of the first major economies to set out a clear and comprehensive approach to crypto regulation, following the EU's MiCA (Markets in Crypto-Assets) regulation, which also provides a licensing process for crypto firms. The UK's proposals are expected to boost the country's competitiveness and attractiveness as a global hub for crypto innovation and investment.

According to the report, the administration intends to present cryptocurrency-related legislation before Parliament by 2024. However, some industry experts have urged the government to expedite the process and provide regulatory clarity within six months, citing the fast-paced and dynamic nature of the crypto market.

The government's announcement comes amid a surge in crypto adoption and interest in the UK, as well as globally. According to a recent report by the Financial Conduct Authority (FCA), the number of UK adults who own crypto assets has increased from 3.9% in 2020 to 8.3% in 2021, representing an estimated 4.4 million people.

The FCA has also warned consumers of the high risks and challenges associated with cryptoassets, such as price volatility, cyberattacks, and scams. The FCA has advised consumers to be cautious and do their research before investing in cryptoassets.