The United Kingdom and its finance ministry is planning to lay the groundwork for new digital currency regulations following the collapse of popular digital currency exchange FTX.
The United Kingdom Doesn’t Want Another FTX in the Books
Financial Services Minister Andrew Griffith commented in a recent interview:
Our view is that this reinforces the case for clear, effective, timely regulation and proactive engagement with [the] industry. This includes a proposal to bring centralized crypto asset exchanges into financial services regulation for the first time, as well as other core activities like custody and lending.
FTX will likely go down as one of the biggest debacles of the digital currency space. The exchange – which first opened its doors for business in 2019 – rose to prominence three years later to become one of the top five digital currency trading platforms in the world. Its founder and chief executive Sam Bankman-Fried was lauded as a genius by many, and his net worth was in the billions towards the end of 2022.
Sadly, this reputation was short-lived as in mid-November, SBF complained of a liquidity crunch on social media. He said he needed fast cash to keep his business in operation, and he eventually turned to his biggest rival Binance about a possible buyout. While things appeared to be moving in that direction for some time, Binance eventually backed away from the deal, claiming the problems FTX was facing were simply too big for it to handle.
From there, the company filed bankruptcy and SBF resigned from his post. Things would have been bad enough if they had stopped there, but the trash meter kept rising. It was later discovered that SBF had utilized customer funds to invest in luxury Bahamian real estate and to pay off loans taken out by his other company Alameda Research. He was eventually arrested and extradited back to the United States. He has entered a not guilty plea and is awaiting trial at his parents’ California home.
The United Kingdom is clearly concerned that something like this could happen again, and it feels legislation is needed to ensure the crypto space remains in check. Will Marwick, CEO of IFX Payments, is confident crypto can do a lot of good in society, and he is enthusiastic about what the newfound regulations can do to ensure the space remains clear and clean.
Keeping Things Straight and Correct
He said in a statement:
Digital assets, specifically stablecoins, and blockchain infrastructure have very beneficial use cases by making secure payment services accessible to all. To ensure the U.K. becomes the global crypto industry hub, the regulations need to balance protectionist measures with practical application.
Some of the new rules that have been suggested for crypto involve all firms in the United Kingdom getting licensed and having to meet specific capital requirements.