UK to Introduce Legislation on Stablecoins, Crypto Staking: Report

The British government plans to introduce legislation to regulate stablecoins and crypto betting.

The move comes as President-elect Donald Trump outlines his plans to make the US a global crypto hub, creating new competition for the UK to retain and attract digital asset companies.

Stablecoin and Staking Legislation

According to a Bloomberg report, the UK Treasury is drafting two legislative measures focused on stablecoins and an exemption requested by cryptocurrency providers to keep participation services separate from existing financial regulations.

The stablecoin laws will allow the Financial Conduct Authority (FCA) to consult with industry on rulemaking. On the other hand, the holdings will be reclassified to avoid being treated as a collective investment, which would impose additional control.

The timing of these new ordinances coincides with Donald Trump’s recent election victory, which has boosted confidence in the US crypto market.

Trump has made bold promises to make the US the world’s leading crypto hub, vowing to fire SEC chairman Gary Gensler, create a Bitcoin reserve and make the US the central location for mining of Bitcoin. His administration is already consulting with industry leaders to shape these new policies.

With the US moving quickly on crypto guidelines, British policymakers are concerned that startups in the sector may seek clearer and more favorable regulatory environments in other jurisdictions.

Speaking to the business publication, Laura Navaratnam, UK policy officer at the Crypto Council for Innovation, highlighted this concern:

“The UK has a real chance to seize a second-mover advantage, but only if it can mobilise.”

He added that the country is further behind the Treasury and that regulators would ideally have wanted.

Implementation roadmap and delays

Sources cited by Bloomberg indicate that the FCA is expected to outline a timetable for its approach to the regulation of stablecoins early next year. The authority’s strategy will involve an initial consultation on stablecoins, followed by a phased plan to address other areas of the crypto market.

The government will also provide an update on developments in the digital securities sandbox, a real-time blockchain testing environment run by the FCA and the Bank of England.

Regulation of stablecoins was initially expected to happen under former Prime Minister Rishi Sunak’s administration over the summer as part of Sunak’s plan to attract digital asset companies to the country. However, they were delayed following a general election in which Labour’s Keir Starmer took power.

Last year, the UK Treasury also announced its intention to provide guidance on stablecoins and other specific areas of cryptocurrency by 2024. This follows a government consultation on fiat-backed digital assets and the ‘approval of the Financial Services and Markets Law in June 2023.

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