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- 1 The UK government is promoting stricter laws around stablecoins to increase the credibility of the crypto space.
- 2 They seem focused on Rishi Sunak’s objective of making the UK a promising hub for crypto assets.
- 3 The newer regulations will integrate traditional assets with crypto assets and space.
The UK government is all set to formulate new rules surrounding stablecoins and their staking services for other crypto assets.
When will new regulations be implemented?
The lawmakers are expected to approve the new rules in the next six months, around the middle of 2024. The lawmakers are asked to approve the rules or at least make a decision before the impending general elections. The regulations will set up a stage for the elections for all the crypto enthusiasts and businesses involved in crypto-related activities.
Bim Afolami, Economic Secretary to the Treasury, addressed an industry event organized by Coinbase in London on Monday, February 19. There, he stated that the government was pushing very hard on the lawmakers to formulate the regulations, which are getting implemented.
Afolami stated, “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.”
What is the background for the new set of rules in the UK?
In October 2023, the Treasury clarified that they would explain rules on specific areas of crypto at some point in 2024. This commitment to update follows an earlier consultation on fiat-backed stablecoins. The previous event was the passing of the larger Financial Services and Markets Act during the summer of 2023.
Implementing stricter rules aims to control market abuse around crypto-asset issuance and disclosures.
Stablecoins are digital tokens that use reserves of assets to maintain a one-to-one value with a traditional fiat currency such as the dollar or pound.
What are the viewpoints of other industry analysts?
Blockchain analytics firm Elliptic, the market observer, has stated that they expect to see fiat-backed stablecoins and their issuers regulated under existing payment laws. This move would allow the UK’s financial regulator to dictate the types of assets that can support a stablecoin.
What will be the implications of updated regulations for the crypto market?
Staking is the process where investors lock up their crypto tokens to help keep a blockchain operating in return for a small yield.
In an interview, Vice President for International Policy at Coinbase, Tom Duff Gordon, stated that this process is expected to receive a new classification with a new set of rules that will avoid being considered collective information.
The broader proposals would cause crypto exchanges and other industry providers under existing traditional services to remain confused. Afolami was also asked if this would become a guideline in 2024, to which he replied that he could not provide a timeline.
Afolami said, “Short answer is, I don’t know.” and to support this answer he added, “There’s just a huge amount going on, so I don’t want to commit to that now.”
Conclusion: Integrating viewpoints of Rishi Sunak
Rishi Sunak, the Prime Minister of the UK, has pledged in 2022 to make the country a global crypto hub. The strategy is to attract more digital asset businesses and investments to the government to achieve this objective.
Since then, very little progress has been made toward what was expected after his statement. The major crypto firms in the country also stated that the unclear regulations have made it difficult for them to operate.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
