In a recent development, the United Kingdom (UK) government plans to implement new crypto regulations for stablecoins and staking services within the next six months, according to a Bloomberg report.
As the pressure builds to fulfill specific proposals before an impending general election, the Economic Secretary to the UK Treasury, Bim Afolami, expressed the government’s determination to expedite legislation.
UK Government Vows Swift Action On Crypto Regulations
At a Coinbase-hosted industry event in London, Afolami emphasized the government’s commitment to address crypto-related matters swiftly. Afolami stated:
We’re very clear that we want to get these things done as soon as possible. And I think over the next six months, those things are doable.
The Treasury initially pledged in October to provide greater clarity on specific areas of the crypto industry by 2024. This commitment followed an earlier consultation on fiat-backed stablecoins. These digital tokens maintain a one-to-one value with traditional currencies, such as the dollar or pound, through reserves of assets.
The passing of the Financial Services and Markets Act in the previous summer further paved the way for regulatory advancements. Blockchain analytics firm Elliptic and other market observers anticipate the regulation of fiat-backed stablecoins and their issuers under existing payment laws. This move would grant the UK’s financial regulator the authority to determine which types of assets can support stablecoins.
Staking, a process where investors lock up their tokens to support blockchain operations in exchange for a small yield, is expected to receive a new classification to avoid being considered a collective investment. In an interview, Tom Duff Gordon, Vice President for International Policy at Coinbase, confirmed this.
However, broader proposals to bring crypto exchanges and other industry providers under existing financial services rules remain unresolved. Afolami admitted he could not provide a precise estimate due to the “extensive” ongoing developments when asked about the potential timeline for such guidance to become legislation.
Clear Rules Ahead?
Prime Minister Rishi Sunak pledged to establish the UK as a global crypto hub in 2022, aiming to attract digital asset businesses and investments to the country. However, limited regulatory progress has been made since then, with crypto firms citing a lack of clear rules hindering their operations.
In 2023, the UK government confirmed plans to tighten regulations for crypto asset activities, bringing them under the same regime as traditional financial services.
These plans include mandating crypto exchanges to outline detailed requirements for admission standards and disclosures for token issuers when listing new assets. This could involve providing information about a token’s underlying code, known vulnerabilities, and risks.
City Minister Andrew Griffith emphasized the importance of creating a clear environment for crypto asset firms to invest and innovate while ensuring customer protection. He stated, “The UK is the obvious choice for starting and scaling a crypto asset business.”
As the government pushes for regulatory reforms, the industry awaits further details on the specific laws and their potential impact on crypto adoption in the UK. The outcome of these regulatory developments may shape the future landscape of the crypto industry in the country, and stakeholders will closely monitor their implementation and effects.
Featured image from Shutterstock, chart from TradingView.com