The UK wants to create firm regulations regarding crypto, as said by the CEO of UK financial regulator, Nikhil Rathi. Cryptocurrency is one of the most hyped assets in the U.K. Most of them are designed to be used as payment methods, and it is hard to keep track of them because of their decentralized nature.
The crypto exchanges in the UK have to be FCA (Financial Conduct Authority) approved because it has taken the responsibility to oversee crypto and enact AML (anti money laundering) and CTF (counter terrorism financing) activities.
The UK considers crypto assets as financial instruments under the Financial Instruments Directive “2”. Under these directives, crypto exchanges have to complete KYC (know your customer) procedures in order to provide trading opportunities to their customers.
Customers can complete KYC by providing government-approved personal documents like passports and driver’s licences etc.
Britain has also made CDD (Customer Due Diligence) mandatory, under which an investor’s risks are determined and the right precautions are taken in order to minimize the risk.
However, FCA does not ensure crypto businesses are safe, nor is it responsible for controlling their clients’ assets.
— Financial Conduct Authority (@TheFCA) July 14, 2022
Britain wants countries to adopt global regulatory standards
The UK created the Cryptoasset Taskforce in March 2018 to determine whether the use of crypto is within the regulatory environment.
The Taskforce announced that cryptos can be used as a barter for using decentralised services. They can be used for investment purposes by either holding or trading.
The UK wants to set standards globally for crypto firms and will collaborate with the US to make regulations.
The FCA had banned the world’s largest cryptocurrency exchange, Binance, from doing any activity because they believed it couldn’t be completely monitored and regulated.
However, many European nations, like France, Spain, and Italy, have allowed Binance to resume operations in their respective countries.