In response to the rapidly growing cryptocurrency market, the United Kingdom presents a multi-stage regulatory plan. The first stage focuses on stablecoins based on traditional currencies, with the intention of covering a wider range of cryptographic assets in subsequent stages.
The United Kingdom is heading towards a crypto future
It’s no secret that cryptocurrencies are becoming increasingly popular worldwide. In response to this trend, the United Kingdom has decided to formulate a regulatory plan for the crypto industry, which will be introduced in several stages.
Stage one: Stablecoin regulation
The British government has primarily focused on the regulation of stablecoins based on traditional currencies. Stablecoins are cryptocurrencies that have a stable value in relation to one or more specific traditional currencies. The government does not intend to recognize stablecoins not based on traditional currencies. The aim is to enable and regulate their use in British payment chains, seeing their potential as the dominant means of payment in retail trade. Oversight of stablecoins will primarily be under the FCA (Financial Conduct Authority), with additional support from the PSR (Payment Systems Regulator) and the Bank of England.
Stage two: Cryptocurrency regulation
In the second phase of the plan, the United Kingdom intends to expand the regulatory framework to a broader range of cryptocurrency-related activities. This includes exchange activities, storage of crypto assets, and lending. The Treasury emphasized that it will not classify unbacked cryptocurrencies, such as Bitcoin or Ethereum, as gambling.
Moreover, the government has noted unique non-fungible tokens (NFTs), which resemble collectible items or works of art. They will not be subject to financial services regulation unless used as exchangeable tokens.
A significant point is also the government’s commitment to supporting decentralized finance (DeFi). Nevertheless, authorities believe that regulating the DeFi sector at this time could stifle growth and innovation.
The publication of the final regulatory plan represents an important step in the United Kingdom’s efforts to establish itself as a leading global hub for cryptocurrency-related businesses. With a clear path forward, the crypto industry and stakeholders can expect a well-defined and regulated environment in the near future.
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