The U.K. Government’s Cryptoassets Task-force has proposed some changes in the regulation of cryptocurrencies. In a report published by the HM Treasury, the Task-force urged to take strong action to address the potential risks associated with crypto assets.
The task-force plans to establish the UK’s policy and regulatory approach to cryptoassets and its underlying DLT technology. The associated risks of cryptoassets and the underlying technology, as well as its potential benefits were explained in the report.
It is expected that the authorities will keep their approach to cryptoassets and DLT under review to make sure the country continues to support innovation, while maintaining safe and transparent financial markets. The most immediate priorities would be to mitigate the risks to consumers and market integrity, and prevent the use of cryptoassets for illicit activity.
The government will issue a consultation in early 2019 to further explore whether and how exchange tokens and related firms such as exchanges and wallet providers could be regulated effectively.
The Cryptoassets Task-force, launched by the Chancellor of the Exchequer in March 2018, consists of HM Treasury, the Financial Conduct Authority and the Bank of England.
The authorities will also guard against threats to financial stability that could emerge in the future, and encourage responsible development of legitimate DLT and cryptoasset-related activity in the UK.
The Task-force said, “Given concerns identified around consumer protection and market integrity in these markets, the FCA will consult on a prohibition of the sale to retail consumers of all derivatives referencing exchange tokens such as Bitcoin, including CFDs, futures, options and transferable securities. The proposed prohibition would not cover derivatives referencing cryptoassets that qualify as securities, however CFDs on securities would remain subject to ESMA’s temporary restrictions and any future FCA proposals to implement permanent measures in relation to CFDs.”
The Task-force said strong action should be taken to address the risks associated with cryptoassets. The authorities plan to engage with international bodies to ensure a comprehensive response.
In a similar development, India’s Financial Stability and Development Council or FSDC said it is considering a blanket ban on the use of private cryptocurrencies in the country. However, the Council plans to encourage the use of Distributed Ledger Technology, known as blockchain.
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