UK Seeking Feedback on Crypto Proposals Amid Scam Warnings

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  • The UK government is seeking feedback from the crypto sector on its plans to become a crypto hub
  • A new consultation process is underway regarding the regulation of crypto entities
  • The move comes just days after a warning was issued over the prevalence of damaging crypto scams in the country

The UK’s Finance Ministry plans to introduce new regulations for the crypto sector and is seeking input from industry experts just days after a report slammed the country’s exposure to crypto scams. The Treasury will publish a consultation today asking for feedback on rules aimed at protecting consumers and supporting the country’s goal to become a crypto hub at the same time as it is digesting accusations from the Bureau of Investigative Journalism (BIJ) that shell companies are engaged in “pig-butchering”, a for of organized crime that is using crypto to carry out its illicit activities.

UK Crypto Regulations Picking up Speed

The Treasury’s proposals, one of the first steps the UK is taking on its road to become a crypto hub, will require trading venues such as exchanges to provide admission and disclosure requirements, and target financial intermediaries such as custodians for crypto asset lending. The consultation also includes plans for a market abuse regime and data reporting requirements for crypto companies.

The consultation will help inform the UK’s Financial Services and Markets Bill, which could give more power to crypto regulators. The bill is currently under discussion in Parliament and is expected to be enacted by Apri, following calls from the British crypto industry seeking clarity on interim operations. The consultation will be open until April 30 and the government will review the feedback and respond accordingly.

Scam Warning Rings Alarm Bells

The timing of the government’s desire to push ahead with its crypto hub plans come just a few days after the BIJ reported that British shell companies are involved in cryptocurrency fraud that has become so widespread that hundreds of millions of pounds has now been lost. An investigation by the BJI and the Observer found that organized crime groups are using the UK as a hub for their operations, taking advantage of the lax regulations to carry out fraud on a large scale.

The investigation identified 168 UK companies accused of running fraudulent crypto or forex trading schemes, with nearly half suspected of being involved in pig-butchering scams. Many of these firms are connected through domain registrations, with most directors based in China, but information on the true owners is limited due to loopholes in the Companies House registration system.

Clearly, the UK will have to get these affairs in order before it can seriously start thinking about being a crypto hub.