Key Takeaways:
- The UK aims to introduce legislation for stablecoins and crypto staking by the summer.
- UK Economic Secretary to The Treasury, Bim Afolami, unveiled the new proposed regulatory framework
In a decisive move to position itself as a global crypto hub, the British government is gearing up to introduce comprehensive regulations for stablecoins and other crypto services by mid-year.
Economic Secretary Bim Afolami announced at the Innovate Finance Global Summit the rapid progress being made towards establishing a robust regulatory framework, with plans for full implementation by July.
The impending legislation marks a significant shift as it brings various cryptocurrency operations, including exchanges and custodial services, under regulatory oversight for the first time in the UK.
Back in 2023, the UK laid the groundwork for these regulations with the passage of a landmark financial markets bill, signaling its intent to treat stablecoins and crypto activities as regulated financial activities.
Both the Financial Conduct Authority (FCA) and the Bank of England have been actively consulting on what a stablecoin regime would entail, with the BoE focusing on overseeing systemic risks posed by stablecoin providers, while the FCA takes a broader approach to regulate the crypto space.
The proposed regulations encompass a wide range of crypto activities, including stablecoins and staking, as well as crypto exchange services and custody of customer assets. Afolami emphasized that the regulatory regime’s scope would be far-reaching, bringing a “whole host” of crypto activities within regulatory bounds.
Afolami hailed the regulatory regime as a cornerstone of the UK’s fintech leadership, emphasizing the government’s commitment to fostering an environment that fosters innovation while safeguarding consumers’ interests.
The government aims to deliver the legislation for its final proposals by June or July before the summer recess.
The proposed rules build upon earlier consultations and proposals, including requirements for firms to obtain authorization from the FCA for crypto-related activities.
While the UK has been proactive in enhancing its regulatory framework for crypto, challenges persist, as evidenced by the Financial Conduct Authority’s recent flagging of 450 illegal crypto adverts in just three months.
Despite these challenges, the UK continues to make strides in crypto adoption, with the London Stock Exchange recently accepting listing applications for Bitcoin and Ethereum exchange-traded notes (ETNs).
