UK to Introduce New Stablecoin and Crypto Laws by July

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On
April
15,
2024,
at
the
Innovative
Finance
Global
Summit,
the
UK’s
Economic
Secretary,
Bim
Afolami,
announced
plans
to
introduce
new
laws
to
regulate
the
issuance
and
usage
of
stablecoins
and
crypto
in
the
country.
This
comprehensive
regulatory
framework
is
expected
to
be
unveiled
by
July
2024
and
will
position
the
UK
as
a
frontrunner
in
regulating
the
proliferating
crypto
industry.

The
UK’s
cryptocurrency
industry
is
one
of
the
fastest-growing
crypto
markets
globally,
outpacing
Germany
and
the
US
after
experiencing
aggressive
growth
over
the
last
decade.
The
popularity
of
cryptocurrencies
in
the
country
and
their
viability
as
legitimate
assets
have
seen
the
country
ammas
over


three
million
cryptocurrency
users.
These
users
are
estimated
to
have
a
combined
wealth
of
over
$3.72
billion
in
cryptos.
Furthermore,
the
UK
crypto
industry
grossed
an
estimated
$1.9bn
in
revenue
in
2023
and
is


projected
to
reach
$2.53bn
in
2024.

This
exponential
growth
and
market
penetration,
as
mainstream
businesses
in
the
UK
are
increasingly
adopting
digital
currencies,
have
fueled
the
need
for
regulation
in
the
industry.

What
to
anticipate
with
the
new
crypto
laws

Today,
cryptocurrencies
have
impacted
numerous
industries,
from
becoming
the
newest
currency
facilitating
transactions
in
online
banking
to
running


casino
demos
in
online
gaming.
Unsurprisingly,
the
UK
aims
to
foster
a
vibrant
and
secure
crypto
environment
in
the
country
by
establishing
clear
rules
of
operation
in
the
crypto
world.

At
the


Innovative
Finance
Global
Summit,
Bim
Afolami
remarked
that
the
final
proposals
for
the
regime
were
being
put
in
place
to
ensure
the
legislation
was
delivered
sooner
rather
than
later.
He
added
that
numerous
crypto
asset
activities
would
come
under
the
regulatory
perimeter
for
the
first
time.
Some
of
the
stipulations
expected
from
the
crypto
regulations
include:

●  

Institution
of
licensing
requirements
for
stablecoin
issuers
to
mitigate
the
concerns
of
potential
financial
instability
of
stablecoins,
which
are
cryptocurrencies
whose
value
is
pegged
to
traditional
assets
or
other
cryptos.

●  

Provision
of
clarity
on
the
tax
implications
of
staking
which
is
when
cryptocurrency
owners
secure
their
assets
to
facilitate
validation
of
a
transaction
on
a
blockchain
network
as
well
as
guarantee
consumer
protection.

●  

Employment
of
more
rigorous
scrutiny
on
the
selling
and
buying
of
digital
assets
on
cryptocurrency
exchange
platforms
to
prevent
criminal
activities
within
the
crypto
environment.
These
platforms
will
probably
be
subjected
to
know-your-customer
(KYC)
and
anti-money
laundering
(AML)
protocols,
just
like
traditional
financial
systems.

●  

Necessitation
of
resilient
security
measures
for
custody
services
providers
as
they
store
crypto
holdings
for
users
at
a
fee
to
safeguard
the
assets
of
users
from
cyberattacks
and
other
threats.

The
UK’s
Economic
Secretary
affirmed
that
the
UK
aims
to
attract
businesses
and
investors
in
this
rapidly
growing
sector
while
ensuring
the
country’s
consumers
are
protected
against
financial
risks
and
fraudulent
activities.

UK’s
journey
to
legislation
in
the
cryptocurrency
ecosystem

 According
to
the


UK
Financial
Conduct
Authority,
in
2019,
only
42%
of
UK
adults
had
heard
of
cryptocurrencies.
In
2022,
however,
91%
of
UK
adults
were
aware
of
cryptocurrency.
In
addition,
in
2022,
the
UK
government
expressed
interest
in
regulating
the
crypto
industry.

●  

Early
2022
–
British
Prime
Minister
Rishi
Sunak
unveiled
that
the
government
plans
to
have
the
UK’s
financial
system
support
crypto
institutions
intending
to
transform
the
UK
into
a
leading
financial
center.
He
shared
that
the
focus
will
be
championing
cryptocurrencies
and
companies’
operations,
investments,
innovation,
and
scalability.

●  

February
2023
–
In
response
to
the
government’s
agenda
of
making
the
UK
a
global
financial
center,
the
UK
Financial
Conduct
Authority
(FCA),
in
partnership
with
the
Bank
of
England
(BoE),
began
consultations
on
developing
a
regulatory
framework
for
stablecoins.
These
consultations
were
informed
by
the
directives
that
the
FCA
would
be
responsible
for
regulating
the
country’s
crypto
environment.
At
the
same
time,
the
BoE
would
be
tasked
with
overseeing
the
operations
of
stablecoin
providers
that
could
impact
the
UK’s
financial
systems
due
to
their
market
size
and
reach.

●  

July
2023
– 
the
UK’s
Law
Commission
overhauled
domestic
crypto
laws
by
introducing
four
major
recommendations
that
would
make
it
possible
for
the
country
to
recognize
cryptocurrencies
and
stablecoins
as
regulated
financial
activities.

Twelve
months
after
this
historic
move
by
the
UK
Law
Commission,
we
anticipate
a
final
regulatory
framework
for
crypto
companies
and
cryptocurrencies
being
unveiled.
However,
this
may
not
be
guaranteed
due
to
the
upcoming
general
elections,
which
are
likely
to
take
place
in
the
second
half
of
2024.

The
Labour
Party
is
currently
favored
to
win
the
elections
and
has
already
expressed
uncertainty
about
the
crypto
regulations.
If
the
Labour
Party
takes
over
power
from
the
ruling
Conservative
Party,
delays
or
revisions
of
the
regulations
before
approval
may
be
the
outcome.
Should
this
become
the
case,
the
UK
cryptocurrency
industry
might
suffer
the
same
fate
as
the
US
crypto
market,
which
is
losing
crypto
users
to
other
jurisdictions
due
to
uncertainty
of
regulations
in
the
country.

Image
source:
Shutterstock

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