- Stablecoins will be regulatory compliant, paving the way for use in the UK as a recognized form of payment.
- Announcement part of a series of measures aimed at making the UK a global hub for technology and investment in crypto-assets.
- Measures include legislation for a ‘financial market infrastructure sandbox’ to help businesses innovate, an FCA-led ‘CryptoSprint’, collaboration with the Royal Mint on an NFT and an engagement group to work more closely with industry.
It is part of a package of measures to ensure that the UK financial services sector remains at the forefront of technology, attracting investment and jobs and increasing consumer choice. He understands:
- the introduction of a “financial market infrastructure sandbox” to allow companies to experiment and innovate,
- establish a Cryptoasset engagement group to work more closely with industry,
- explore ways to improve the competitiveness of the UK tax system to encourage further development of the crypto-asset market,
- and working with the Royal Mint on a non-fungible token (NFT) this summer as an emblem of the forward-looking approach the UK is determined to take
Chancellor of the Exchequer, Rishi Sunak said:
My ambition is to make the UK a global hub for crypto-asset technology, and the measures we have outlined today will help ensure businesses can invest, innovate and grow there.
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 for the long term.
This is part of our plan to ensure that the UK financial services industry is always at the forefront of technology and innovation.
Stablecoins are a form of cryptoasset that are usually pegged to fiat currency such as dollars and are intended to maintain stable value. With proper regulation, they could provide a more efficient means of payment and expand consumer choice.
The government intends to legislate to bring stablecoins – when used as a means of payment – into the payments regulatory perimeter, thereby creating the conditions for stablecoin issuers and service providers to operate and to invest in the UK.
By recognizing the potential of this technology and regulating it now, the government can ensure financial stability and high regulatory standards so that these new technologies can be used reliably and safely.
The UK’s vision to be a global hub for crypto-asset technology was set out in a speech by Treasury Economic Secretary John Glen at the Innovate Finance Global Summit today.
He also announced that the UK will proactively explore the potentially transformative benefits of Distributed Ledger Technology (DLT) in UK financial markets, which allows data to be synchronized and shared in a decentralized way to potentially achieve greater efficiency. , increased transparency and resilience.
The government will legislate to establish a financial market infrastructure (FMI) ‘sandbox’ that will allow companies to experiment and innovate in the provision of the infrastructure services that underpin markets, including enabling testing distributed ledger technology. The government has further confirmed that it will launch a research program to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.
John Glen also confirmed that the government will consult on broader regulation of the crypto-asset sector later this year.
Other measures include:
- The UK government will explore ways to improve the competitiveness of the UK tax system to encourage the development of the UK crypto-asset market. It will look at how DeFi lending — where holders of crypto-assets lend them out for a return — is treated for tax purposes. The government will also consult on extending the scope of the investment manager exemption to include crypto-assets.
- The Chancellor has instructed the Royal Mint to create a non-fungible token this summer.
- The Financial Conduct Authority will host a two-day “CryptoSprint” in May with industry participants, directly soliciting industry input on key issues related to the development of a future crypto-asset regime.
- The Economic Secretary will establish and chair a Crypto-Asset Engagement Group, bringing together key figures from regulators and industry to advise the government on issues facing the crypto-asset sector.
In his speech at Mansion House in July 2021, the Chancellor set out his vision for the future of the financial services sector, which included a plan to ensure the UK remains at the forefront of technology and innovation . It was one of four key elements of that vision, with the ultimate goal of building a financial services industry that continues to be the one the rest of the world looks to.
The government launched a consultation on crypto-assets and stablecoins last year and today published its response outlining next steps.