Source: Sharecast
In a statement released on Wednesday, HM Treasury said it wanted to "robustly" regulate crypto-asset activities along the lines of traditional finance, thereby providing "confidence and clarity" to both consumers and businesses.
In particular, it wants to place responsibility on trading platforms to define the detailed content requirements for admission and disclosure documents. It also wants to strengthen rules around financial intermediaries and custodians, which have responsibility for facilitating transactions and storing customer assets.
Andrew Griffith, economic secretary to the Treasury, said: "We remain steadfast in our commitment to grow the economy and enable technological change and innovation, and this includes crypto-asset technology.
"But we must also protect consumers who are embracing this new technology, ensuring robust, transparent and fair standards."
The digital asset sector has soared in popularity in recent years, attracting significant interest from retail investors. But the last 12 months have proved highly turbulent. Lender Celsius collapsed in July, and was followed soon after by trading platform FTX - including the subsequent arrest of FTX’s high-profile founder Sam Bankman-Fried - and the value of cryptocurrencies have plunged.
The sector is not regulated by the UK’s Financial Conduct Authority, however, and is viewed by many as finance’s equivalent of the wild west.
The Treasury acknowledged that the sector was experiencing "high levels of volatility", and that recent failures had exposed the "structural vulnerability" of some firms.
It continued: "Our robust approach to regulation mitigates the most significant risks, while harnessing the advantages of crypto technologies. This enables a new and exciting sector to safely flourish and grow."
The government has launched a consultation on its proposals, which will close on 30 April.