Digital currencies and other crypto assets that use some sort of distributed ledger technology (DLT) are rapidly increasing in popularity. As a result of this massive rise in the adoption of crypto assets, there is a need for concerned governments to create policies that curb the potential negative impacts and at the same time magnify the benefits of these crypto assets. Some years ago, the United Kingdom created the Crypto Assets Taskforce with the aim of creating regulatory policies around crypto assets in the country.
What Is The Crypto Assets Task Force?
The crypto asset taskforce in the UK was established in March 2018 by the Chancellor of the Exchequer (HM Treasury) as a vital element of the country’s fintech sector strategy. This task force combines human resources from the His Majesty’s (HM) treasury, the Financial Conduct Authority (FCA), and the Bank of England. The primary objective of the crypto asset task force in the United Kingdom is to analyze the possible impact of crypto assets and distributed ledger technology (DLT) and create appropriate policies to mitigate these potential impacts. According to the Treasury, crypto assets are “cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored or traded electronically.” Bitcoin and Ethereum are popular examples of crypto assets. These cryptocurrencies and other financial markets like forex are best traded via forex brokers with fastest execution times that make it easy to avoid slippage and enter your forex and crypto trades at your desired price entry level.
An Overview Of The UK Crypto Asset Market
Let’s take a brief look at how crypto asset transactions work and their regulation in the United Kingdom.
- How Crypto Assets Transaction Work:
Crypto asset transactions are mostly done via digital wallets which are synonymous with a digital bank account. The digital wallet will generate two digital keys that usually consist of alphabets and numbers and are used to identify the owner of the wallet during transactions. There is the public key and private key. The private key is a passcode that should be secret and not shared with anyone while the public key is more like an account number that can be freely shared for transaction purposes. All blockchain transactions are confirmed via blocks that keep an auditable record of all crypto asset transactions
- Crypto Assets regulation in the UK:
The main regulatory body that oversees activities in the UK’s financial markets is the Financial Conduct Authority (FCA). The major goal of the FCA is to regulate the conduct of financial firms (both wholesale and retail) to main integrity in the United Kingdom. Brokers, crypto exchanges, and most businesses related to crypto assets in the United Kingdom are under the regulatory jurisdiction of the FCA. The FCA ensures that crypto asset businesses follow anti-money laundering procedures. Also, the UK Advertising Standards Agency (ASA) is now a part of crypto regulation by monitoring crypto-asset promotions on social media platforms, websites, and advertisements both online and offline.
The Taskforce’s Response To Crypto Assets
The UK government plans to make the country a global crypto-asset technology hub and has set out some actions to support this goal.
- Consumers’ Protection:
The crypto asset task force in the UK is focused on the enlightenment of consumers on the risk associated with crypto assets as there is so much marketing buzz around crypto assets and many people are naive about the risk associated with crypto assets investments. Cryptocurrencies, a very popular type of crypto assets, are not regulated and the Financial Services Compensation Scheme does not cover consumers in an event that something goes wrong with a crypto investment. As a result, crypto asset investments are high-risk and may result in the loss of some or all of the initial investment. It is advisable to only invest with registered crypto asset businesses and keep the private key of your digital wallet secret to avoid scammers.
- The Registration of Crypto Assets Businesses:
The crypto asset task force and the UK government mandates crypto asset business to register their businesses. This is mainly targeted at crypto exchanges that are involved in the conversion of cryptocurrencies to fiat currencies (like the dollar) and vice versa. This registration of crypto asset businesses is aimed at countering terrorist financing and preventing anti-money laundering. The crypto asset task force encourages crypto consumers to check the regulation of crypto businesses before investing in such businesses.
Conclusion On The Crypto Assets Taskforce In The UK
The UK government and financial regulatory bodies plan to make the UK a global crypto-asset technology hub. To achieve this goal deliberate actions must be taken. Three important financial regulatory bodies came together to form the crypto asset task force in the United Kingdom. The financial bodies that make up the crypto asset task force in the UK are the His Majesty (HM) Treasury, The Financial Conduct Authority (FCA), and the Bank of England. This trio is working together to control the negative impacts of crypto assets and to magnify the numerous benefits of crypto asset technology.
Disclaimer: The article published are the opinions of the author based on their own reading and research of the topic, and therefore do not constitute financial or legal advice. For more information related to crypto regulatory news please visit our friends at Trading Beasts.