The UK's approach to cryptocurrency regulation has been measured in recent years, but it is now maturing in the post-Brexit financial landscape. In 2020, the Supreme Court confirmed in a ruling that cryptocurrency assets are property, which gave them legal rights of disposal. However, to date, there are no specific regulations regarding cryptocurrencies, which are not considered legal tender.

According to the Bank of England, cryptocurrencies lack classic defining characteristics, and therefore are not considered "money" and do not pose a systemic risk to the stability of the banking system. However, because the legal implications, regulations, and status of cryptocurrencies can vary depending on their nature, type, and use, the FCA (Financial Conduct Authority) and the Bank of England have issued a number of warnings and guidelines regarding their use. These warnings include the lack of regulatory and monetary protection for cryptocurrencies' status as stores of value, and the dangers associated with speculative trading and exchange rate volatility.

Due to the fact that, along with the growing interest in cryptocurrencies, the awareness of what cryptocurrencies are and what risks trading in them involves is not growing, but is actually decreasing among their holders, in recent months Great Britain has begun work on regulating the cryptocurrency market.

The initial focus was on advertising content, and at the beginning of this year a parliamentary working group was established to regulate this market.

In December 2021, the UK Advertising Regulator banned campaigns promoting cryptocurrencies, including those run by Coinbase, Kraken, and Papa John's Pizza. The regulator found that cryptocurrency ads misled audiences by exploiting consumers' inexperience and failed to disclose investment risks.

According to the proposal, advertising cryptoassets will be subject to FCA (Financial Conduct Authority) regulations, which apply to advertising financial services and products. This will mean, among other things, that cryptocurrency ads will have to inform about potential investment risks, be presented in an understandable manner, and not mislead consumers.

A permanent working group in Parliament, including representatives from the cryptocurrency market, has also been established. It is chaired by Lisa Cameron, MP of the House of Commons, who declares: "We must ensure that the UK has the right regulatory framework in place to support innovation and ensure that the UK remains an attractive place for innovative companies to start and grow."

At the same time, he pointed out that “It is equally important that we have a clear system of consumer protection, ensuring that they understand the risks and are protected against the risk of economic harm resulting from fraud and scams.”

This alert is for informational purposes only and does not constitute legal advice.

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