The British government is preparing legislation to regulate stablecoins, as well as activities such as crypto staking, exchange operations, and custody services.
Economic Secretary Bim Afolami announced during the Innovate Finance Global Summit that the government is working rapidly to finalize the legislation. He stated that once implemented, various crypto asset activities will fall under regulatory oversight for the first time.
This legislation is expected to be in place by June or July.
In October, the UK government announced its intention to subject fiat-backed stablecoins to oversight by the Bank of England, Financial Conduct Authority, and Payment Systems Regulator.
The goal is to minimize potential risks to customers and address concerns related to conduct, prudential matters, and financial stability, especially in the context of stablecoins being used for payments.
The UK treasury proposed regulations for the crypto sector in February, intending to apply similar regulatory standards to digital asset companies as those governing traditional financial firms.
The government aims to strike a balance between regulating the crypto sector and positioning Great Britain as a global cryptocurrency hub.
The treasury emphasized that its approach to regulation is robust, aiming to mitigate significant risks while facilitating the growth of the crypto sector in a safe manner, which will in turn stimulate job creation and investment.
However, despite these efforts, the crypto sector remains largely unregulated globally, as highlighted in a recent report by the Financial Action Task Force (FATF), which revealed that fewer than 30% of jurisdictions worldwide are regulating the industry.
T. Raja Kumar, head of the FATF, likened virtual assets to water, noting that they tend to flow towards jurisdictions with less regulation. He emphasized the need for strong regulation across the entire global chain to prevent regulatory arbitrage and combat criminal activity.
Additionally, a report from the FBI’s Internet Crime Complaint Center (IC3) showed a significant increase in complaints about cryptocurrency scams in 2023, with losses reaching $3.9 billion, highlighting the growing need for regulatory measures to protect consumers from fraud and scams in the crypto space.
