HM Treasury sets out phased regulatory approach for stablecoins
The UK government has set out its final plans to bring crypto assets under the authority of financial regulation as national payment chains prepare to facilitate the use of fiat-backed stablecoins.
HM Treasury sets out regulatory plan for stablecoins
Updates released this week state that the next stage of implementation will see HM Treasury introduce legislation bringing “activities relating to fiat-backed stablecoins into the regulatory perimeter” by early next year.
The perimeter will be expanded again in phase 2 of the implementation, which the document clarifies as the regulation of the “wider types of cryptoassets”, namely commodity-backed tokens and stablecoins used to transaction cryptoassets on exchanges.
Elsewhere, the updates also recognise that it is currently too early to issue regulatory guidance on decentralised finance (DeFi), citing it as “a nascent, complex area carrying unique challenges”.
The move comes after a busy year in the UK government’s bid to regulate cryptoassets. In June, its Financial Services and Markets Act passed into law, brining cryptocurrency under the remit of the Financial Conduct Authority (FCA), which recently clamped down on the transparency of financial promotions relating to cryptocurrency.
Andrew Griffith, economic secretary to the Treasury, says the government’s sustained efforts intend to make the UK “a place where cryptoasset firms have the clarity needed to invest and innovate, and where customers have the protections necessary for confidently using these technologies”.
He explains that although a majority of the proposals have been “well received”, the updates delivered this week are in relation to more recent public consultation, specifically the delineation between the two phases of regulating stablecoins.
Adding to this, CryptoUK, a UK-based trade association for the cryptocurrency industry, says it welcomes the government’s latest response to cryptoasset regulation.
“In particular, we are pleased to see that the Treasury acknowledges that it would be ‘premature and ineffective’ to regulate DeFi activities currently, something which CryptoUK and its members have consistently flagged to lawmakers.”
“Overall, we are pleased that the Treasury has listened to industry concerns and acknowledged that clarifying a regulatory regime in the UK will be important to realise the government’s ambition – and our own – of Britain becoming a global crypto hub.”
