The Government has launched a consultation on its plans to regulate cryptoasset activities in the UK.
The consultation, which aims to provide clarity for consumers and businesses alike, will run until 30 April 2023 and includes "ambitious plans" to protect consumers while growing the economy.
The proposals include strengthening the rules of crypto trading platforms to create a "world-first" regime for crypto lending.
As cryptoassets are a relatively new class of assets, the Government is looking to harness the potential benefits and grow the economy by embracing technological change and innovation.
Under plans set out by the Government on 1 February 2023, the proposals will seek to regulate a broad range of crypto activities in the same way as traditional finances.
This will mean placing responsibility on crypto trading venues for defining the detailed content requirements for the admission and disclosure documents - ensuring exchanges have fair and robust standards.
Andrew Griffith, Economic Secretary to the Treasury, said:
"We remain steadfast in our commitment to grow the economy and enable technological change and innovation - this includes cryptoasset technology.
"But we must also protect consumers who are embracing this new technology - ensuring robust, transparent and fair standards."
Crypto taxes
There have been concerns from industry leaders that crypto investors may not fully understand their tax liabilities when it comes to their gains and losses.
Crypto assets such as Bitcoin and Ethereum are subject to income tax and capital gains tax, as with any other chargeable asset.
The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) aim to raise awareness of investors' obligations to HMRC.
With the phased reduction in capital gains tax exemptions rolling out from April 2023, the CIOT and ATT are reminding investors to ensure they're tax compliant.
Gary Ashford, chair of the CIOT and ATT crypto assets working group, said:
"Not only can cryptocurrency investments trigger capital gains tax liabilities that are not obvious to the investor, but tax can be payable even where the investor does not think their crypto investments have been profitable.
"These problems should not be ignored: HMRC have identified that there is a risk of underreported gains in this area and have a special focus on crypto compliance."
FCA warns of new crypto regime
The Financial Conduct Authority (FCA) is warning crypto businesses to prepare for rule changes to advertising later in the year.
This means that companies must be compliant with anti-money laundering safeguarding when promoting crypto.
Currently, any cryptoasset advertising must be approved by a firm with full FCA authorisation.
In a statement, the FCA said:
"All cryptoasset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime.
"Firms must start preparing now for this regime. We will take robust action against firms breaching these requirements."
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