UK Government unveils plans for stablecoins to be used as payment in the UK
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UK Government unveils plans for stablecoins to be used as payment in the UK 05 April 2022UK Reporter: Jenna Lomax
Image: Pawel Litwin
The UK Treasury has asked the Royal Mint to create a non-fungible token, just a day after the UK Government unveiled plans that would allow so-called stablecoins to be used as payment in the UK.
The latter announcement is part of a series of measures to make the UK a global hub for cryptoasset technology and investment, says the government.
Stablecoins are a form of cryptoasset that are typically pegged to a fiat currency such as the dollar and are intended to maintain a stable value.
The government intends to legislate to bring stablecoins – where used as a means of payment – within the payments regulatory perimeter, creating conditions for stablecoins issuers and service providers to operate and invest in the UK.
By recognising the potential of this technology and regulating it now, the UK Government aims to ensure financial stability and high regulatory standards.
The UK’s vision for being a global hub for cryptoasset technology was set out in a speech by the Economic Secretary to the UK Treasury, John Glen at the Innovate Finance Global Summit yesterday (4 April).
He also announced that the UK will proactively explore the potentially transformative benefits of distributed ledger technology in UK financial markets, which enables data to be synchronised and shared in a decentralised way to achieve greater efficiency, transparency and resilience.
Commenting on government’s plans, Chancellor of the Exchequer, Rishi Sunak said: “It is my ambition to make the UK a global hub for cryptoasset technology, and the measures we have outlined today will help to ensure firms can invest, innovate and scale up in this country.
He added: “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.”
However, there is some concern from industry leaders. Anton Chashchin, managing partner of Bitfrost.io, comments: “The UK may have just announced new measures to further integrate cryptos into our financial system. But it strikes me that while the UK is saying it wants to become a crypto hub, it is simultaneously taking steps that will exclude lots of players, especially the smaller ones. That will only move these firms abroad.”
He adds: “The challenge is that the Financial Conduct Authority has very high regulatory standards, and will demand thorough anti-money laundering measures, which most crypto firms simply do not have the capability to do, and definitely not on short notice. The whole premise of crypto is that it is anonymous so there is a lot of work to do.
“Policy makers should prioritise connecting with people from the industry and different organisations or groups that have already formed to create a roundtable discussion and ensure that all needs are taken into consideration. A framework will both encourage adoption from institutions and safeguard investors from some of the unsavoury activities that have drawn negative media attention to the industry.”
On this regulatory point, we published this last week.
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Image: Pawel Litwin 