The United Kingdom’s Treasury Department has proposed that unbacked crypto assets and derivatives be excluded from its digital securities sandbox project. This recommendation was outlined in a consultation document released on July 11th.
The document suggests that the regulatory sandboxes, formed under the country’s Financial Services and Markets Act, would allow the UK government to modify existing crypto regulations if necessary. However, the proposal indicates that these considerations may not apply to “unbacked” crypto assets and derivatives, as laws for these assets are still being developed.
The Treasury Department has announced that it will accept views and recommendations on its proposed digital securities sandbox until the consultation period concludes in August 2023. Given the proposed framework, it’s possible that even established cryptocurrencies like Bitcoin and Ethereum may not be eligible for participation in this initiative.
There are continuous signs that the UK is tightening cryptocurrency regulations.
UK legislators have referred to cryptocurrencies as “unbacked” and suggested they should be classified as a form of gambling. They have also advocated for the categorization of blockchain technology as a form of gambling.
The Financial Conduct Authority in the UK has warned firms that the framework, commencing in October 2023, will only permit four lawful routes to promote crypto assets.
The Financial Services and Markets Act will impose specific regulations on businesses operating in the UK that trade in cryptocurrencies. These rules aim to foster the development of innovative technologies while protecting consumer interests.