UK bans public crypto offerings, only allowing through exchanges

The UK is taking steps to regulate the crypto market with new legislation expected by 2026. The Financial Conduct Authority (FCA) recently released a discussion paper outlining plans for crypto-asset admissions and disclosures. One major change is the ban on public offerings of crypto assets, except through regulated cryptocurrency exchanges or to qualified investors. This shift aims to hold exchanges accountable for thorough due diligence on offerings.

The FCA is mindful of creating disclosure requirements that are informative without being overly burdensome or costly. While consumers need detailed information, it shouldn’t overwhelm them with unnecessary details. The UK also encourages some forward-looking statements from issuers, with certain protections in place to avoid excessive liability.

To prevent market abuse, the FCA plans to address issues like insider trading, disclosure of inside information, and market manipulation. The challenge lies in adapting traditional market abuse regulations to the unique characteristics of the crypto market, including cross-border trading and lack of clear issuers in some cases.

The UK’s National Storage Mechanism (NSM) will serve as a repository for regulated information, including prospectuses from issuers of crypto-assets. Insisting on timely dissemination of inside information by crypto exchanges and requiring issuers to play an active role in this process are some ways the UK is approaching market surveillance.

While the paper primarily focuses on cryptocurrencies and stablecoins, separate consultations are expected for fiat-referenced stablecoins in the future. The UK’s strategy involves a three-step process of discussion, consultation, and policy implementation to ensure a well-rounded regulatory framework for the crypto market.