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UK Government Outlines Measures to Recognize Stablecoins, Support Crypto and Blockchain Innovation

source-logo  coincodex.com 05 April 2022 08:33, UTC

Key highlights:

  • HM Treasury has outlined its plans to recognize stablecoins and make the UK a hub for crypto and blockchain technology
  • The HM Treasury plans to introduce regulation that will make stablecoins a recognized means of payment in the UK
  • The UK government will also explore potential changes to the tax system to boost the development of the crypto asset market

UK government outlines measures to regulate and support innovation in crypto and blockchain

HM Treasury, the department of the United Kingdom’s government that’s responsible for financial and economic policy, has outlined its plans to make the UK “a global hub for cryptoasset technology and investment”. 

According to a statement published by HM Treasury, it plans to create a package of measures to regulate crypto assets and allow the country’s financial industry to keep up with the technological advancements related to blockchain technology. For example, HM Treasury intends to introduce regulation that would make stablecoins a recognized form of payment in the UK. The Treasury says that stablecoins could offer more efficient payments and broader consumer choice if regulated appropriately. 

In May, UK financial regulator FCA will be holding an event called “CryptoSprint” where it will directly engage with crypto asset industry participants and gather their feedback on how the country’s crypto asset regulations should be approached. The Economic Secretary will establish a “Crypto Asset Engagement Group”, which will provide a way for meeting regulators and industry participants to discuss the crypto asset sector. 

Other measures the UK government is exploring include possible changes to the country’s tax system to spur development of the country’s crypto asset market. Notably, this will include a review of the tax treatment of decentralized finance (DeFi) loans. 

As a gesture to the HM Treasury’s commitment to fostering innovation in crypto assets and related technologies, the Royal Mint is expected to launch a non-fungible token (NFT) this summer. 

Chancellor of the Exchequer, Rishi Sunak, commented on the HM Treasury’s planned measures:

“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.”

The FCA has been actively regulating the crypto space

While cryptocurrency trading is allowed in the United Kingdom, the country’s financial regulator FCA has been quite actively involved in the space.

In 2020, the FCA banned companies from offering cryptocurrency derivatives, which includes products like futures contracts, options and CFDs, to retail investors. In 2021, the FCA issued a consumer warning regarding the Binance cryptocurrency exchange, saying that the company did not have the necessary permission to “undertake any regulated activity in the UK”. In March this year, the FCA warned crypto ATM operators in the country to shut down, saying that no firm currently offering these services in the UK has the necessary approval. 

coincodex.com