The U.K. government is moving forward with its plan to harness the expanding crypto and digital asset market by organizing a public consultation on planned stablecoin and cryptocurrency regulations. The move is part of the U.K.’s economic transformation post-Brexit with an emphasis on leveraging the developing fintech landscape.
UK Ponders Regulation for Bitcoin, Utility Cryptos, and Stablecoins
In a recently released document, Her Majesty’s (HM) Treasury announced the call for public consultation of the government’s approach to regulating cryptocurrencies and stablecoins. The move is in line with previous communications from the U.K. finance ministry about its intention to regulate the novel sector.
Indeed, as previously reported by the government announced plans to unveil a regulatory framework for crypto-assets back in Nov. 2020. At the time, the Treasury revealed that authorities were also keen on creating a robust and cost-efficient payment architecture while maintaining its position in the world of fintech innovation.
An excerpt from the Treasury’s document reads:
“The UK has long been recognised as a world-leader in financial technology. We are committed to maintaining this position.In practice, thatmeans creatinga regulatory environmentin which firms can innovate, while cruciallymaintaining the highest regulatory standards so that people can use new technologies reliably and safely. This is essential for confidence in the financial system more broadly.”
Detailing its planned approach to crypto regulations, the U.K. Treasury remarked that it would adopt a “same risk, same regulatory outcome” policy which will eliminate the risk of regulatory arbitrage in the cryptocurrency market. Also, the U.K. government’s virtual currency laws will seek to provide adequate anti-money laundering (AML) compliance protocols.
As part of the draft crypto laws, Bitcoin and other speculative cryptocurrency assets will be exempted from stringent oversight but will fall under AML compliance laws. The same will also be applied for digital assets deemed to be utility tokens.
Concerning stablecoins, the government plans to focus on creating regulations for issuers. Algorithmic and seigniorage stablecoins are not under the remit of the current regulatory proposals. According to the Treasury’s document, public consultation on the regulatory proposal will be open until Mar. 21, 2020.
When passed, the U.K. Financial Conduct Authority (FCA) will have an expanded mandate over cryptocurrency businesses in the country. As part of its increased responsibilities, crypto exchanges will have to obtain operating licenses from the regulatory watchdog. The FCA’s ban on the sale of crypto derivatives to retail investors recently came into effect.