UK Government Plans to Introduce Crypto and Stablecoin Regulations Within the Next 6 Months
The United Kingdom is preparing for a significant regulatory development in the cryptocurrency industry, as it plans to introduce comprehensive legislation for stablecoins and staking services within the next six months.
The upcoming Crypto and Stablecoin Regulations 2024 aim to bring clarity to stablecoins and staking services. Staking, which is the process where investors lock up their tokens to support a blockchain, is expected to undergo a reclassification. Tom Duff Gordon, Vice-President for International Policy at Coinbase, noted that staking will be reclassified to avoid being considered a collective investment.
During an industry event hosted by Coinbase in London, Bim Afolami, the Economic Secretary to the Treasury, affirmed the government’s commitment to taking swift action. Afolami stated that they want to get these regulations done as soon as possible and believes that it is achievable within the next six months.
This commitment from the Treasury follows their initial promise in October 2023 to provide more clarity on crypto-related matters in 2024. Afolami’s election as the new Economic Secretary to the Treasury fueled speculation, as he was referred to as the ‘crypto tsar’ by the former Secretary, Andrew Griffith. However, Afolami’s proactive stance on crypto, including his meeting with Coinbase in 2022, and now the introduction of new regulations within a year of his election, solidifies his position as a supporter of cryptocurrencies.
This regulatory move comes in response to increasing pressure to address regulatory uncertainties in the crypto space. The UK government’s push for stablecoin and staking regulations is seen as a significant step towards creating a more transparent and secure crypto environment.
While stablecoins are expected to fall under existing payment laws, granting regulators control over asset backing, staking services will receive a new classification.
However, broader proposals to regulate crypto exchanges and other industry providers are still pending. Afolami was unable to provide a timeline for these proposals, citing the significant amount of ongoing work.
In November 2023, the Bank of England unveiled stablecoin regulations that will come into effect in 2024. These regulations will focus on regulating stablecoins backed by the British pound. The framework emphasizes collaboration between the Bank of England and the Financial Conduct Authority (FCA), with the BOE overseeing systemic stablecoins and the FCA governing the broader crypto market.