HM Treasury Sets Out New Proposed Regulations
for Cryptoassets

The new rules, set out at the Innovate Finance Global Summit, will bring firms offering cryptoassets – such as Bitcoin and Ethereum – under the same regulatory perimeter as traditional financial firms. This includes:

• Crypto exchanges – digital platforms that facilitate the buying, selling, and trading of cryptocurrencies between users e.g. Binance or Coinbase
• Crypto dealers – companies or individuals that buy and sell cryptocurrencies directly to customers, usually from their own inventory
• Crypto agents – intermediaries that connect investors with a dealer or exchange, such as websites that earn a commission when consumers buy crypto

UK firms must also demonstrate that they meet clear operating standards relating to transparency, consumer protection and operational resilience. It is hoped that introducing these new rules will help to boost innovation in the UK as part of the government’s objective to establish the country as a technology hub whilst also deterring fraud, scams, and “bad actors”.

Unfortunately, cryptocurrency scams and fraud are common and the industry remains widely unregulated, meaning investments are not always as safe as they seem. A recent report from City watchdog, the Financial Conduct Authority (FCA) found that around a third of investors incorrectly believed that their cryptocurrency was covered by the regulator should something go wrong.

The term ‘cryptoassets’ refers to digital – i.e. entirely online – items that can be bought, sold, or traded, which use blockchain technology to securely record ownership. Cryptoassets can refer to:

• Cryptocurrency – in short, digital currency. Well-known cryptocurrencies include Bitcoin and Ethereum.
• Tokens – similar to coupons or tickets. Tokens can provide access to online services, represent ownership (like traditional shares) or can simply be used for trading.
• Non-fungible tokens (NFTs) digital certificates or receipts proving the holder owns a unique digital item – such as artwork or music.

Crypto’s exclusivity makes it an exciting prospect for investors, but it also attracts scammers.

Crypto scams are becoming more advanced, with fraudsters constantly finding clever new ways to separate investors from their money. These scams often involve impersonation, stolen wallets, and unauthorised trading, all of which have been designed to appear legitimate.

A common tactic used by crypto scammers is to copy or clone real cryptocurrency firms and providers by setting up websites, social media profiles, and digital wallets that mimic genuine ones, sometimes using nearly identical web addresses. These clone sites may even display fake customer reviews or made-up trading results to seem more reliable.

In other cases, the scammers’ aim is to trick investors into handing over sensitive information in a process known as ‘phishing’. Phishing pages are designed to capture personal details like login credentials or wallet recovery phrases. Once a scammer gains access, they can lock out the account owner by resetting passwords and taking control of the account.

Many cryptocurrency scams involve Authorised Push Payment (APP) fraud, a type of scam where the victim is persuaded to transfer money from their bank account to the scammers using online banking. In crypto scams, the money is often sent to a crypto trading account in the victim’s name, under the scammer’s control. The scammer, who may be posing as a crypto ‘adviser’ or ‘trader’, says they will invest the money in cryptocurrency on the victim’s behalf but instead fraudulently moves it to their own account, often overseas, making it difficult to trace or recover.

TLW Solicitors has a team of APP Fraud specialists who can handle financial claims. We have a successful track record for actively pursuing claims with banks that allowed fraudulent payments, as well as taking claims to the Financial Ombudsman Service (FOS). FOS is an independent, government-backed body set up to settle disputes between FCA-regulated financial institutions and their customers.

While changes to APP fraud reimbursement were introduced on 7 October 2024, the new rules do not apply to all cases. We can undertake a free, no-obligation assessment of your case and advise on whether you have a valid claim.

We work on a ‘no-win, no-fee’ basis, meaning that if your case is unsuccessful, we will not charge you for the time we have spent on it.

TLW Solicitors’ Legal Director, Sarah Spruce, commented on the Treasury’s proposed new cryptoasset rules:

“Crypto is definitely here to stay, but the industry has been unregulated and under-policed for a long time, so it is promising to see the government taking crypto seriously by exploring ways to bolster its regulation. My team helps clients every day who have fallen foul of scams targeting their cryptoassets and who are often unsure of where to turn with such little regulation. Hopefully these new rules can prevent more people being caught out in the future.

For anyone who has lost money to a crypto scam, my team has a wealth of experience taking APP fraud claims to banks and FOS, and we are on hand to have a confidential, no obligation conversation about your situation. There is no need to be embarrassed or ashamed if you or a loved one have been the victim of a scam – as these new proposals highlight, you are not alone. Get in touch to see if you may be eligible to make a ‘no-win, no-fee’ claim.”