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<p>In April the Government announced a number of specific reforms to strengthen cryptoasset
regulation, including a commitment to bring stablecoins into payments regulation,
and to consult on a wider cryptoasset regulatory regime later this year. The Government
has also announced forthcoming legislation which, along with supportive Financial
Conduct Authority (FCA) rules, will regulate in-scope cryptoasset financial promotions,
requiring them to be fair, clear and not misleading for consumers. The Government
has taken action to mitigate the illicit finance risks associated with cryptoassets.
All cryptoasset firms in the UK must now be registered for supervision by the Financial
Conduct Authority. As a part of this process, cryptoasset firms must demonstrate systems,
controls, policies and procedures adequate to deal with the particular risks of the
cryptoasset market and any officers, managers and beneficial owners must be fit and
proper.</p><p> </p><p>These commitments are in line with the Government’s objectives
to create a regulatory environment in which firms can innovate, while crucially maintaining
financial stability and regulatory standards so that people can use new technologies
both reliably and safely. The Cryptoasset Taskforce – HMT, the Bank of England, and
the FCA – continues to monitor ongoing development in cryptoasset markets closely.</p><p>
</p><p>Volatility is a characteristic of certain cryptoassets. The FCA and Bank of
England have warned that cryptoassets are high risk investments, and that investors
should be prepared to lose all of their money.</p><p> </p><p>The Bank of England’s
Financial Policy Committee (FPC) has recently noted that direct risks to the stability
of the UK financial system from cryptoassets are limited, and that crypto technologies
are growing and becoming more interconnected with the core financial system.</p>
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