According to Bloomberg, the British government is expediting the approval of new regulations for stablecoins and crypto asset staking services, aiming to have these rules passed by lawmakers within the next six months.
This statement comes amidst mounting pressure to deliver concrete proposals before an impending general election.
Expedited Crypto Legislation
Economic Secretary to the Treasury, Bim Afolami, affirmed this commitment during an industry event hosted by Coinbase in London on Monday. Afolami stated that the government is “pushing very hard” to enact legislation promptly, expressing confidence that tangible progress can be achieved within the specified timeframe, Bloomberg reported.
This move follows the Treasury’s initial pledge in October to offer enhanced clarity on specific areas of cryptocurrency regulation by 2024. Notably, the commitment ensued after an earlier consultation on fiat-backed stablecoins and the passing of the Financial Services and Markets Act in the previous summer.
Market observers, such as blockchain analytics firm Elliptic, anticipate that fiat-backed stablecoins and their issuers will be subjected to regulation under existing payment laws. This approach would empower the UK’s financial regulator to dictate which asset types can underpin stablecoins, contributing to a more structured and secure digital asset ecosystem.
Additionally, staking services, a fundamental aspect of blockchain operations, are set to receive a new classification that overcomes categorization as collective investments.
Tom Duff Gordon, vice president for international policy at Coinbase, emphasized this development in an interview, highlighting the importance of clear regulatory frameworks for fostering innovation while ensuring investor protection.
Crypto Regulation Delays Persist
Despite these advancements, broader proposals to bring crypto exchanges and industry providers under existing financial services regulations remain unresolved. Afolami refrained from providing a definitive timeline on when such guidance might materialize, citing the complexity of ongoing developments within the sector.
In 2022, UK Prime Minister Rishi Sunak committed to making the UK a leading center for crypto businesses and investments. However, the progress in regulatory measures has been slow, causing concerns among crypto firms about the unclear regulations affecting their operations.
By October 2023, the UK government expressed its plan to regulate the crypto sector under its financial laws, necessitating companies to secure approval from the Financial Conduct Authority (FCA) for crypto-related operations.
This led to several companies, including Revolut and Bitfinex, halting their services in the UK. To adhere to the FCA regulations, Coinbase started asking its UK users to fill out risk-acknowledgment forms from the previous month. Bittrex Global also announced its decision to wind down operations in November, citing regulatory hurdles and shrinking market share.
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