UK to regulate stablecoins

The United Kingdom will regulate stablecoins and aim to be a global hub for crypto, blockchain tech and cryptocurrency investment in general.

HM Treasury made the announcement, shortly after it was also revealed the Royal Mint will create an NFT (non-fungible token artwork).

Stablecoin UK Regulation Plans

Read the press release here. The plan includes:

  • Regulation of stablecoins
  • Recognising stablecoins as a valid form of payment
  • Legislating for a ‘financial market infrastructure sandbox’ to help firms innovate
  • An FCA (Financial Conduct Authority) led ‘CryptoSprint’ event over two days in May
  • Establishing a Cryptoasset Engagement Group to work more closely with the crypto industry
  • Enhancing the competitiveness of the UK tax system on crypto taxation

Many UK and worldwide investors have been earning interest on stablecoins in recent years as they offer a higher interest rate than traditional bank savings accounts.

Chancellor Rishi Sunak added:

It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country. We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term. This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.

The Economic Secretary to the Treasury John Glen also gave a speech outlining the plans at the Innovate Finance Global Summit this week.

He announced that the UK will explore using Distributed Ledger Technology (DLT) in the UK financial markets, and look into the legal status of decentralized autonomous organisations (DAOs). Read that keynote speech here.

It’s not yet clear whether the United Kingdom will regulate existing popular stable coins – USDT (Tether), USDC, DAI, TUSD, BUSD, UST, etc. – or introduce its own central bank digital currency (CBDC) pegged to the value of the Pound (GBP).

Cryptoassets are a highly volatile unregulated investment product.