Proposals designed to regulate “turbulent” crypto-assets have been set out by the government.
The sector has seen a collapse in value by an estimated 75% from their peak of about $3 trillion in November 2021.
It comes at a time when it is estmated 10% of UK adults now own some form of crypto.
Rather than creating a new set of regulations, the government intends to use existing legislation.
Crypto would benefit from “confidence, credibility and regulatory clarity” of the existing system for financial services, as set out in the UK’s Financial Services and Markets Act 2000 (FSMA).
It concedes some crypto businesses will continue operating from offshore jurisdictions with fewer rules.
Economic Secretary to the Treasury Andrew Griffith, pictured, said the government remained “steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes crypto-asset technology”.
He added: “But we must also protect consumers who are embracing this new technology – ensuring robust, transparent and fair standards.”
Prime Minister Rishi Sunak, then Chancellor, said he wanted to make the UK “a global hub for crypto-asset technology”.
But the industry worldwide has been buffeted by a series of crises – most recently, the collapse of the FTX exchange, which prosecutors have described as “one of the biggest financial frauds in US history”.
The so-called crypto winter has raised questions about whether the industry can ever be effectively regulated.
Conservative MP Harriett Baldwin, who chairs the Treasury Committee, told BBC News it had heard evidence of “truly Wild West behaviour” but also recognised there was “valuable technological innovation happening that could benefit the UK economy”.
“We are paying close attention to these plans and to the regulators’ plans, because we would not want our constituents to think cryptocurrencies are any less risky if they are regulated,” she said.
Jason Guthrie, European head of digital assets at the financial firm, Wisdom Tree, told the BBC: “Having a solid a regulatory framework, having enforcement capabilities, is really important for consumer confidence.
“The sooner we have details around concrete proposals, the easier it is to plan for and build towards.”