HM Treasury announced today that the UK government will acknowledge stablecoins as a form of valid payment. The government is expected to create legislation to bring stablecoins within the payments regulatory perimeter, creating conditions for stablecoins issuers and service providers to operate and invest in the UK.
According to the government, approval of stablecoins is part of a move to empower the UK to become a global hub for digital asset technology and investment. By regulating stablecoins now, the government aims to ensure financial stability and high regulatory standards.
The move on stablecoins is part of a series of measures to enable crypt-asset innovators to operate with government approval. These include an infrastructure sandbox, a “crypto-sprint” led by the Financial Conduct Authority (FCA) and the Royal Mint experimenting with NFTs or non-fungible tokens.
The government says it will establish a Cryptoasset Engagement Group to work more closely with the industry.
Chancellor of the Exchequer, Rishi Sunak commented:
“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country. We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term. This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”
John Glen, Economic Secretary to the Treasury, outlined the vision for supporting a global crypto hub at the Innovate Finance Global Summit today. He said they want to make the UK “the very best place in the world to start and scale crypto-companies.”
“If there is one message I want you to leave here today with, it is that the UK is open for business – open for crypto businesses.”
Glen noted that questions on crypto-assets remain and skeptics abound but they are willing to embrace the unknown and if “crypto-technologies are going to be a big part of the future, then we – the UK – want to be in, and in on the ground floor.”
The potentially transformative benefits of Distributed Ledger Technology (DLT) or blockchain in UK financial markets will be reviewed.
Later in 2022, there will be a wider consultation on the crypto-asset sector.
Additionally:
- The UK government will explore ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the UK. It will review how DeFi loans – where holders of cryptoassets lend them out for a return – are treated for tax purposes. The government will also consult on extending the scope of the Investment Manager Exemption to include cryptoassets.
- The Chancellor has commissioned the Royal Mint to create a Non-Fungible Token this summer.]
- The Financial Conduct Authority will hold a two-day ‘CryptoSprint’ in May with industry participants, seeking views directly from industry on key issues relating to the development of a future cryptoasset regime.
- The Economic Secretary will establish and chair a Cryptoasset Engagement Group, convening key figures from the regulatory authorities and industry to advise the government on issues facing the cryptoasset sector.
The statements made by the UK government today are an encouraging sign that policymakers have listened to the concerns of Fintech innovators and are willing to support individuals that are aiming to improve upon traditional financial services. This stands in stark contrast to the US, where SEC Chairman Gary Gensler delivered a speech today effectively stating that all crypto assets are securities and will be regulated like securities, regardless of how it might harm sector development.