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UK Aims to Become Global Crypto Hub, Says Exchequer

source-logo  coindesk.com  + 14 more 04 April 2022 17:58, UTC

The U.K. government on Monday announced a series of initiatives towards a goal of making that country a global center for crypto technology and investment.

“The measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” said Chancellor of the Exchequer Rishi Sunak in a press release.

Headlining initial steps, according Sunak’s statement and Exchequer Minister John Glen – speaking at the Global Finance Summit - will be bringing stablecoins into the U.K. payments framework.

"This will enable consumers to use stablecoin payment services with confidence,” Glen said. “The government will introduce this legislation as part of an ambition to deliver a world leading regulatory regime for stablecoins."

Read more: The UK Wants to Regulate Crypto: Here's What That Could Look Like

In 2019 the U.K.’s financial regulator the Financial Conduct Authority (FCA) published its “Guidance on Crypto Assets.” In the report the FCA set out that crypto firms with digital assets for cross-border payments could be subject to payments services regulations, but the tokens themselves wouldn’t be regulated.

Taxes

The Treasury is looking to engage closely with the public on changes it wants to make to the tax system. "We don't think the tax code will need major surgery to make it work more easily for crypto," Glen said.

“The U.K. is also playing a leading role in negotiations on the new tax reporting framework to enhance tax transparency and consumer confidence while enabling a level playing field in tax reporting globally,” he added.

Additionally, the U.K. Treasury will aim to resolve specific issues like the treatment of decentralized finance loans and staking. Plus, it will amend the investment manager exemption to remove disincentives to U.K. fund managers from including crypto assets in their portfolios.

Decentralized autonomous organizations (DAO) have not escaped U.K. regulator scrutiny. The Treasury asked the Law Commission, an independent body that keeps the law of England and Wales under review, to undertake a new project to consider the legal status of DAOs. A DAO is a blockchain-based organization or company that is usually governed by a native crypto token, with anyone holding these tokens able to vote on important company decisions.

The crypto regime

In addition to the stablecoin legislation, the Treasury is marching on with broader plans to set up a “world-leading regime … [facilitating] safe and sustainable and I hope, rapid innovation,” said Glen.

For that, the government will be launching a high level industry group called the crypto asset engagement group to help guide next steps in regulation.

This will be a direct open channel of communication chaired at ministerial level with senior representatives from the FCA, the Bank of England as well as from businesses, said Glen, and it will meet up to eight times a year.

There are also plans for legislation establishing a financial market infrastructure, or “Sandbox” that will enable firms to experiment, innovate and enable distributed ledger technology (DLT) to be tested.

Meanwhile, the FCA will hold a two-day "CryptoSprint" in May, where it will seek views from the industry on key issues relating to the development of a future crypto asset regime.

An NFT?

As icing on the cake, said Glen, the U.K. government has asked The Royal Mint to create a non-fungible token (NFT) that will be issued in summer as “an emblem of the forward looking approach we are determined to take.”

coindesk.com

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