UK Plans Cryptocurrency Regulations, Seeks Global Collaboration

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Three new cryptocurrency-focused exchange-traded funds (ETFs), including an Ethereum Futures ETF, a Global Bitcoin Composite ETF, and a Privacy ETF, have been proposed for approval by Grayscale Investments. The Global Bitcoin Composite ETF would make investments in exchange-traded goods based on or supporting Bitcoin BTC, including Bitcoin mining companies. Through shares that follow the price of ETH, the Ethereum Futures ETF would enable indirect exposure to ETH’s possible future worth. The Grayscale Privacy ETF would make investments in businesses developing privacy-based blockchain technologies. All of the three ETFs will be offered for sale to the general public once the SEC approves the registration statement related to Grayscale Funds Trust. Regarding the change of its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product, Grayscale is still engaged in a heated dispute with the SEC.

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The Securities and Exchange Commission (SEC) of the United States has proposed a new regulation requiring financial businesses to use licensed custodians to preserve all of their client’s assets, including cryptocurrency. Organizations that don’t typically support the crypto business, such as financial powerhouse JPMorgan and the Small Business Administration (SBA), criticized this plan. The rule, according to SEC Chair Gary Gensler, will assist prevent advisers from misusing, misappropriating, or abusing investors’ money. The SEC was allegedly taking an “overly broad approach” that would disturb the financial markets, according to JPMorgan. The Securities Industry and Financial Markets Association referred to the proposed regulation as “jurisdictional overreach” and asserted that some asset classes, including repurchase agreements, securities loans, derivatives, and annuities, might be unable to comply. State-chartered trust companies are nevertheless keen to learn if they can make a list, despite the assurances of investment firms a16z and Coinbase’s Custody Trust Co. Both Bakkt Holdings Inc. and NYDFS stated that the only way to guarantee they are secure custodians is to use state-chartered trust organizations that specialize in cryptocurrencies. The only method to guarantee that trust businesses that focus on cryptocurrency are secure custodians is to follow NYDFS’s regulatory structure. The recent drama around the failure of crypto-related banks and the collapse of FTX may have made traditional gatekeepers wary about crypto custody.

Although the U.K. has proposed regulations for the cryptocurrency industry, stakeholders urge the nation to work with regulators across the world to prevent isolation after Brexit. The consultation period ended on April 30, and major players in the world market submitted their opinions. In the upcoming 12 months, the U.K. intends to issue cryptocurrency-specific legislation and integrate cryptocurrency into its current regulatory frameworks. The Financial Services Markets Act will be used to regulate cryptocurrency in the U.K., and organizations that deal in digital assets will need to apply for permission. Additionally, it aims to establish a market abuse regime and regulate stablecoins in accordance with national payment regulations. The government’s “same risk, same regulatory outcome” approach, which will take into account the nuances of emerging developments and their particular benefits and hazards, is supported by CryptoUK.

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