The UK government plans to have MPs approve new legislation for stablecoins and staking within the next six months. Treasury Economics Secretary Bim Afolami stressed the government’s determination to “press hard” for swift legislation on stablecoins and staking among altcoins at an industry event on Monday, Bloomberg reported. Underlining the urgency, Afolami emphasized the government’s stance on taking action with the aim of enacting regulations within the next six months.
UK to roll out phased regulatory framework for altcoins
The UK has taken a two-pronged approach to regulating crypto. In October, the Treasury published definitive proposals for the supervision of fiat-backed stablecoins, specifically targeting their use in payments. This marks the first phase of its plans, with the broader cryptoasset sector coming to terms with its own regulatory framework outlined in separate policy documents.
This phased approach lays the groundwork for addressing the various dynamics of the broader crypto landscape, while keeping the focus on stablecoins that the government sees as potentially impacting mainstream finance. Fiat-backed stablecoins face regulation in two areas: use in payments and UK-based issuance/storage.
UK powers three regulators
A trio of regulators – the Bank of England, the Financial Conduct Authority and the Payments Systems Regulator – will jointly oversee certain fiat-backed stablecoins under the proposed regulations. These proposals follow a February consultation on the UK’s future financial services regulations for crypto assets.
A strong response to the regulations has emerged, with insightful feedback from a variety of companies and stakeholders. While some have hailed the UK’s latest crypto regulatory proposals as in line with Rishi Sunak’s vision of developing a national crypto hub by 2022, others remain cautiously optimistic. Treasury Secretary Andrew Griffith had previously announced his approval of the stablecoin framework, calling it “a step in the right direction” after months of public expectation.
What does the call for regulation mean?
This call for a balanced approach to investment comes at a crucial time. The UK stock market is facing challenges with a significant contraction in the number of liquid stocks, a trend also seen in global markets. Afolami’s strategy aims to reduce risks to investors and stimulate the UK’s financial markets.
This transition period requires informed decision making by investors as the UK navigates these regulatory and market dynamics. The government’s swift action to regulate crypto and the push for diversified investments marks a pivotal moment in shaping the UK’s future.
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