Stablecoins — cryptoassets normally pegged to a fiat currency — will be brought within the remit of UK regulation, paving their way for use as a recognised form of payment, the government announced Monday.
John Glen, the UK's Economic Secretary to the Treasury, told delegates at the Innovate Finance Global Summit in London that the government "will be legislating to bring certain stablecoins into our payments framework — creating the conditions for stablecoin issuers and service providers to operate and grow in the UK".
Most stablecoins are pegged to the US dollar, with smaller amounts to the euro and yen. They are intended to maintain a stable value. With appropriate regulation, the government said, they could provide a more efficient means of payment and widen consumer choice.
The government published its response to its 2021 consultation focused on stablecoin regulation and is to consult on wider regulation of the cryptoasset sector later this year.
Glen said: "We think the market has changed sufficiently for us to look at regulating a broader set of crypto activities including trading of tokens like bitcoin — and we will consult on a world-leading regime for the rest of the crypto-market, too."
He added that this would "facilitate safe and sustainable and, I hope, rapid innovation".
The government also announced further measures to help the UK's financial services sector remain at the forefront of technology, including:
- Exploring ways to enhance the competitiveness of the UK tax system to encourage further development of the cryptoasset market.
- Working with the Royal Mint this summer on a nonfungible token (NFT), which is a uniquely distinguishable blockchain-based cryptoasset.
- Introducing a "financial market infrastructure sandbox" to enable firms to experiment and innovate to provide infrastructure services that underpin markets, in particular by testing distributed ledger technology (DLT).
- Starting a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.
UK regulator the Financial Conduct Authority will hold a two-day "CryptoSprint" on 10–11 May with industry participants, to seek views and collaborate on developing a cryptoasset regime for the future, the government said.
— To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.