(Bloomberg) — The U.K. announced a plan for government oversight of stablecoins and said it would consult on regulating a wider set of cryptoasset activities, signaling engagement with an industry it has clashed with at times as digital assets gain mainstream appeal.
The government will amend existing legislation for electronic payments to bring stablecoins — a form of cryptoasset that is typically pegged to a fiat currency such as the dollar — under the remit of regulators.
Stablecoin-based payment systems will also be subject to appropriate competition regulation by the Payment Systems Regulator. Those stablecoin activities deemed to have the potential to be systemic risks will be regulated by the Bank of England, according to the report.
“The government considers that an amended e-money framework can deliver a consistent framework to regulate stablecoin issuance and the provision of wallets and custody services,” the U.K.
Treasury said in a report Monday.
Britain’s top financial authorities, including the Bank of England and the Treasury, have stepped up scrutiny over the crypto sector in recent months, and some in the industry have warned of an exodus of talent without a clearer regulatory framework.
The efforts announced Monday are an attempt to address some of these concerns and help make the case for Brtain as a crypto-friendly environment.
In a speech Monday, Economic Secretary to the Treasury John Glen described the underlying technology used for crypto – distributed ledger technology and blockchain – as game-changing, and stated the U.K.
is open for crypto business. Meanwhile, Chancellor Rishi Sunak asked the Royal Mint to create a nonfungible token (NFT) to be issued this summer.
“If crypto-technologies are going to be a big part of the future, then we — the U.K.
— want to be in, and in on the ground floor,” Glen said at the Innovate Finance Global Summit in London.
Chris Perkins, the president at CoinFund, a blockchain-focused investment firm, told Bloomberg it is imperative that governments around the world remain consistent and transparent when it comes to regulation around stablecoins.
“This will give founders and entrepreneurs the confidence to innovate, create and drive value. Stablecoins power web3. With the right policies in place, stablecoins will be a huge opportunity — not a threat — for the global financial system,” said Perkins.
Former Chancellor of Exchequer Philip Hammond — now a senior adviser for crypto firm Copper — warned in January that Britain has fallen behind other finance hubs in Europe when it comes to setting clear regulation on the burgeoning crypto industry.
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