Response to the HM Treasury’s Future Financial Services Regulatory Regime for Cryptoassets Consultation Call

In this document, we respond to the UK's HM Treasury’s Future Financial Services Regulatory Regime for Cryptoassets Consultation Call. In particular, we focus on the provisions relating to cryptoasset trading venues and cryptoasset custodians. We welcome the HMT’s view that cryptoasset service providers are in fact operating in a similar manner to existing financial intuitions, and hence, their activities should be held to a similar bar. We agree with the principle “same risk, same regulatory outcome,” and the direction in creating tailored provisions specifically targeting the unique characteristics and addressing the specific risks arising from cryptoassets. However, we submit that the consultation fails to provide sufficient clarity on several key issues. One of our principal concerns is that the consultation inadequately addresses the critical issue of cybersecurity, which is a major challenge faced by cryptoasset service providers. Here, the consultation is deficient in recognising the high risks and non-compliance with industry standards. We further contend that more stringent liability provisions, particularly in the context of cybersecurity incidents such as hacks and malfunctions, are necessary and advocate for greater clarity on the definition and scope of such events. Furthermore, we identify and address several other key issues, and offer suggestions. Nonetheless, we strongly advocate for standardisation in various niche areas of the industry