(Original title: It is rumored that the UK will launch a regulatory plan for the encryption industry to ease concerns about policy uncertainty)
Zhitong Finance has learned that the British government will formulate plans to regulate the cryptocurrency industry this month to discourage the transfer of the cryptocurrency industry caused by the United States under Trump. The move is intended to reassure companies about their business prospects in the UK. People familiar with the matter said that the British Treasury is planning to legislate in two areas: stablecoins (tokens pegged to the value of less volatile assets such as the US dollar), and a separation legislation sought by cryptocurrency providers to make so-called staking. Note services are excluded from current financial regulation.
The move to deregulate cryptocurrencies was celebrated by the industry as Trump won the election, giving assets including Bitcoin a huge boost. The risk for the UK is that startups will look to other jurisdictions, such as the US, where the rules are clearer or more favorable.
Trump promised to make the United States the global cryptocurrency capital, fire SEC Chairman Gary Gensler, create a government-owned Bitcoin reserve, and ensure that all future Bitcoin is mined within the United States.
The Conservative government led by former British Prime Minister Rishi Sunak had expected to pass the legislation this summer as part of his 2022 pledge to attract digital asset businesses and make the UK a global crypto hub. But Sunak’s decision to call a general election in July, which the Conservatives lost, delayed the timetable and Prime Minister Starmer’s Labor government shelved the plan.
Legislation on stablecoins would pave the way for the UK Financial Conduct Authority (FCA) to consult the industry on the rules. Investors, who lock up their tokens to help keep the blockchain operating in exchange for small returns, are expected to receive a new classification that avoids being viewed as a collective investment scheme and subject to additional scrutiny. The industry views equity investments as providing technology services rather than direct asset management as would be implied by being classified as a collective investment scheme.
new rules
A spokesman for the UK Treasury declined to comment. An FCA spokesperson said that the FCA plans to publish a roadmap for regulating the cryptocurrency industry “soon.” Two people familiar with the matter said the roadmap could include a timetable for the FCA to publish a consultation paper on stablecoins early next year, followed by phased regulation of other areas of cryptocurrencies.
The British government will also update industry on the progress of the Digital Securities Sandbox (DSS), a blockchain experimental field environment jointly run by the FCA and the Bank of England, people familiar with the matter said.
Executives and lobbying groups revealed that the lack of progress on UK legislation is making crypto companies wary of committing resources to the UK, especially as the EU’s wide-ranging regulation of crypto asset markets is set to be fully implemented by the end of this year.
Laura Navaratnam, head of UK policy at industry body the Crypto Council for Innovation, said: “The UK has a real opportunity to take advantage of being a late mover, but only if it can mobilize. We are even better than the Treasury and regulators ideally expect. Go a little further.”
The UK Treasury said last year that it would provide clearer regulations on specific areas of cryptocurrency sometime in 2024. Previously, the UK government held consultations on fiat-backed stablecoins and passed the broader Financial Services and Markets Bill in June 2023.
