UK Treasury to Omit Derivatives, Unbacked Tokens from Sandbox

The United Kingdom Treasury Department has suggested in its recommendations for a digital securities sandbox that unbacked crypto assets and derivatives be removed from the scope of the project. 

In a consultation document that was released on the 11th of July, HM Treasury stated that the regulatory sandboxes that will be formed under the country’s Financial Services and Markets Act would provide the United Kingdom government with the time to change the existing laws for crypto goods if it were deemed necessary to do so. This statement was made in reference to the fact that the regulatory sandboxes will be formed under the country’s Financial Services and Markets Act.

However, according to the consultation paper, these considerations may not be taken into account when it comes to “unbacked” crypto assets, which are assets for which laws are still in the process of being formed, as well as derivatives. This is because “unbacked” crypto assets are assets for which laws are still in the process of being developed.

The U.K. Department of the Treasury has announced it will consider views and recommendations regarding its proposed digital securities sandbox until the consultation period ends in August 2023. Given the framework, it’s possible that even cryptocurrencies like Bitcoin and Ethereum may not qualify for participation in this Treasury initiative

Legislators in the United Kingdom have in the past referred to cryptocurrencies as “unbacked” and stated that they need to be categorized as a kind of gambling. They have also advocated for the classification of blockchain technology as a form of gambling.

As a direct consequence of the Financial Services and Markets Act, businesses that operate in the United Kingdom and engage in the trading of cryptocurrencies will be forced to comply with a number of particular regulations. These rules are designed to encourage the development of innovative technologies while simultaneously protecting the interests of consumers.

The Financial Conduct Authority in the United Kingdom issued a warning to firms that the framework would only allow four routes to lawfully communicate cryptoasset promotions commencing in October 2023.