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UK Crypto Taskforce Suggests Update to Regulations, Definitions

UK Crypto Taskforce Suggests Update to Regulations, Definitions

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A report shared by the UK Cryptoassets Taskforce cites several proposed changes in the nation’s cryptocurrency regulations, in addition to categorizing and defining the different variations of cryptoassets.

New opportunities, new dangers

Published Monday 29 October, the taskforce’s paper stipulates that using cryptoassets as investments can raise new opportunities in business. Although, as regulations currently stand, these opportunities are at ”inappropriate levels” of risk, including dangers associated with illicit activities.

The UK taskforce praised initial coin offerings’ (ICOs) ability to bring a new format of investment options to startup companies, promoting innovation, improving efficiency and developing a new ”type” of investor.

The report does state, however, that the risks cryptoassets pose on these investors is notable, particularly because of their susceptibility to market abuses such as pump and dump scheme and other forms of price manipulation.

This could be changed in the future though if the industry takes on the Financial Promotions rules that the report proposes, giving the product or service in question a more ”balanced impression”, according to the taskforce.

Defining and categorizing

Another proposal in the report includes clearly defining the various forms that cryptoassets take and sorting them into categories thereafter. The framework it offers lays out three types of cryptoassets: security tokens, exchange tokens, and utility tokens.

While none of these types may be recognized as money right now due to their high volatilities, the task force lays out a progressive approach in that it believes the decentralized technology systems behind them may allow cheaper and more efficient financial transactions to be conducted in the future.

The Cryptoassets Taskforce was launched in May this year, constituting members from the Bank of England and the Financial Conduct Authority (FCA).

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