UK’s Stablecoin Regulation Paves Way for Bitcoin, NFTs to Follow

Key Insights:

• The UK is planning to establish a dynamic regulatory framework for crypto such as Bitcoin.
• The government will initially legislate to recognize stablecoins for payments.
• The Brit government has asked The Royal Mint to create an NFT issued in Summer.

The British government is moving in leaps and bounds towards becoming a “global hub for cryptoasset technology and investment.” The Treasury Department has revealed a slew of initiatives, including establishing a dynamic regulatory regime for cryptocurrencies.

Bitcoin to Follow Stablecoins

On Monday, the HM Treasury announced plans to prioritize regulating stablecoins as a valid means of payment. This could provide a “more efficient means of payment and widen consumer choice,” it said in a release.

By legislating stablecoins such as Tether (USDT), USD Coin (USDC), and Dai, the Treasury intends to create a conducive environment for stablecoin issuers and service providers to operate and invest in the UK.

Chancellor of the Exchequer Rishi Sunak said in the release,

“The measures we’ve outlined today will help 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.”

The government has also hinted that Bitcoin and other cryptos are waiting next for possible regulations. Per John Glen, the UK’s economic secretary to the Treasury, “the way we regulate crypto-technologies needs to be dynamic.”

Revealing the government’s crypto plan at the Innovate Finance Global Summit, Glen noted that the government would soon look into a crypto regulatory regime for Bitcoin. He said,

“We think the market has changed sufficiently for us to look at regulating a broader set of crypto activities, including trading of tokens like Bitcoin. We will consult on a world-leading regime for the rest of the crypto-market too.”

Watch live as Economic Secretary to the Treasury @JohnGlenUK tells the @InnFin Global Finance Summit the steps we are taking to position the UK as a global hub for cryptoasset technology. https://t.co/qJMXHpK01p

— HM Treasury (@hmtreasury) April 4, 2022

According to Glen, the government sees significant potential in cryptocurrencies such as Ethereum (ETH) and Ripple (XRP) and wants to take advantage of them. He also confirmed that the Treasury would consult regulation of cryptoassets with the broader crypto community, considering the sector’s energy consumption.

More ‘Crypto-Friendly’ Measures Unveiled

UK’s ‘detailed plan’ gave a green signal to develop the potential of blockchain technology, including its uses for issuing government bonds or gilts.

Finance Minister Rishi Sunak’s announcement also confirmed that the government would not be sidelining the burgeoning NFT sector. Together with exploring stablecoin regulation, the Treasury will also work with the Royal Mint on an NFT. The non-fungible token will be released this summer “as an emblem of the forward-looking approach.”

“This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”

Additionally, Glen noted that the Bank of England and the regulatory authority FCA plan to launch a regulatory “sandbox” in 2023 that will test the use of blockchain in market infrastructure.

A two-day program dubbed ‘CryptoSprint’ will be held in May by the UK’s financial watchdog with industry participants, addressing key issues relating to the development of a future cryptoasset regime, the release stated.