The United
Kingdom government revealed plans this week to push through the long-awaited
cryptocurrency regulations within the next six months.
Speaking at
a cryptocurrency industry event in London this week, Bim Afolami, the Economic
Secretary to the Treasury, stated that the government aims to establish rules
on stablecoins and staking services by August.
Stablecoins
are cryptocurrencies pegged to traditional assets like the US dollar or pound
sterling to minimize volatility. Staking allows cryptocurrency holders to earn
rewards for helping validate blockchain networks.
“We’re
very clear that we want to get these things done as soon as possible. And I
think over the next six months, those things are doable,” said Afolami
during the Coinbase crypto event on Monday.
The move
comes after years of promises to regulate the multi-billion pound industry. In
October 2022, the Treasury pledged to provide guidance on stablecoins and
staking, but a concrete timeline was never set.
Cryptocurrency
regulation was a core pledge of Prime Minister Rishi Sunak’s leadership
campaign in 2022. However, little progress has occurred since his election,
hampering growth of the sector.
The
government faces pressure to deliver rules before the next general election,
expected in early 2025. But, Afolami admitted he could not provide a timeline
for regulating crypto exchanges and other major industry players.
“There’s
just a huge amount going on, so I don’t want to commit to that now,” he
stated.
All eyes
will now turn to Westminster to track whether the government can turn this rhetoric into a reality within the next six months.
Light Crypto Regulation in
the UK
The
cryptocurrency industry contributes billions to the UK economy each year. Clear
oversight is seen as necessary to protect consumers and facilitate ethical
innovation in the space. It’s worth noting that just a few months ago, the Bank of England claimed that stablecoins pose “a significant risk to financial stability.”
Cryptocurrencies
are currently lightly regulated in the UK, but stricter rules are expected to
come into effect over the next year. The Financial Conduct Authority (FCA) is
the main financial regulator overseeing cryptocurrencies. So far, the FCA has
mainly focused on anti-money laundering rules for cryptoasset firms. New
rules introduced in 2023 brought crypto promotion and advertising under FCA
regulation, including marketing and consumer protection standards. The FCA
also oversees some security tokens that provide rights akin to traditional
investments.
However,
comprehensive formal regulation is still lacking but expected to come through
legislation in 2024. The UK government has confirmed plans to regulate crypto
exchanges, trading platforms, custodians and more under traditional financial
services rules, likely including reserve requirements, governance, market
conduct and consumer protection.
The UK aims
to become a global hub for ethical crypto innovation. While cryptoassets remain
high-risk investments currently lacking oversight, formal legislation is seen
as essential to building trust and confidence, according to industry leaders.
The entire industry is awaiting concrete action from the government to deliver
on its promises of regulation within the next year.
The United
Kingdom government revealed plans this week to push through the long-awaited
cryptocurrency regulations within the next six months.
Speaking at
a cryptocurrency industry event in London this week, Bim Afolami, the Economic
Secretary to the Treasury, stated that the government aims to establish rules
on stablecoins and staking services by August.
Stablecoins
are cryptocurrencies pegged to traditional assets like the US dollar or pound
sterling to minimize volatility. Staking allows cryptocurrency holders to earn
rewards for helping validate blockchain networks.
“We’re
very clear that we want to get these things done as soon as possible. And I
think over the next six months, those things are doable,” said Afolami
during the Coinbase crypto event on Monday.
The move
comes after years of promises to regulate the multi-billion pound industry. In
October 2022, the Treasury pledged to provide guidance on stablecoins and
staking, but a concrete timeline was never set.
Cryptocurrency
regulation was a core pledge of Prime Minister Rishi Sunak’s leadership
campaign in 2022. However, little progress has occurred since his election,
hampering growth of the sector.
The
government faces pressure to deliver rules before the next general election,
expected in early 2025. But, Afolami admitted he could not provide a timeline
for regulating crypto exchanges and other major industry players.
“There’s
just a huge amount going on, so I don’t want to commit to that now,” he
stated.
All eyes
will now turn to Westminster to track whether the government can turn this rhetoric into a reality within the next six months.
Light Crypto Regulation in
the UK
The
cryptocurrency industry contributes billions to the UK economy each year. Clear
oversight is seen as necessary to protect consumers and facilitate ethical
innovation in the space. It’s worth noting that just a few months ago, the Bank of England claimed that stablecoins pose “a significant risk to financial stability.”
Cryptocurrencies
are currently lightly regulated in the UK, but stricter rules are expected to
come into effect over the next year. The Financial Conduct Authority (FCA) is
the main financial regulator overseeing cryptocurrencies. So far, the FCA has
mainly focused on anti-money laundering rules for cryptoasset firms. New
rules introduced in 2023 brought crypto promotion and advertising under FCA
regulation, including marketing and consumer protection standards. The FCA
also oversees some security tokens that provide rights akin to traditional
investments.
However,
comprehensive formal regulation is still lacking but expected to come through
legislation in 2024. The UK government has confirmed plans to regulate crypto
exchanges, trading platforms, custodians and more under traditional financial
services rules, likely including reserve requirements, governance, market
conduct and consumer protection.
The UK aims
to become a global hub for ethical crypto innovation. While cryptoassets remain
high-risk investments currently lacking oversight, formal legislation is seen
as essential to building trust and confidence, according to industry leaders.
The entire industry is awaiting concrete action from the government to deliver
on its promises of regulation within the next year.
