The UK will announce a new scheme for crypto regulation in the coming weeks, as more countries explore incorporating crypto into finance.
The UK government is currently working on proper regulation for the country’s crypto market. On course to reveal plans in the coming weeks, the British government will also reportedly focus on stablecoins, its uses, and effects. Stablecoins are digital currencies pegged to the value of other assets such as crypto, fiat, or exchange-traded commodities.
Rishi Sunak, Finance Minister of the UK, will make the announcement on the new regulatory regime for crypto in the European region. Although a lot is still unclear about the details of the plan, inside sources allege that it will likely favor the crypto industry. This will come about most especially in the way of legal clarity, which the crypto space desperately needs now. Sources also state that Treasury officials are willing to learn about the crypto market and all its paraphernalia. In fact, the UK Treasury Department has also discussed the upcoming regulatory scheme with a number of crypto businesses and trade groups. Most notable among these is Gemini, a popular crypto exchange and issuer of stablecoin Gemini dollar (GUSD).
Bank of England Emphasizes Need for Crypto Regulatory Framework that Ensures Financial Stability
On Thursday, March 24th, the Bank of England implored policymakers to include the risks posed by crypto in its regulatory framework. In a letter addressed to bank CEOs, BOE Deputy Governor Sam Woods extensively expressed pros and cons. Woods first highlighted the benefits posed by a crypto structure in mainstream finance. According to him:
“Cryptoasset technology is creating new financial assets, and new means of intermediation. The underlying technologies behind cryptoassets have the potential to improve the efficiency and resilience of the financial system over time, including through lower transaction costs, higher payment system interoperability, and more choice for users.”
However, the BOE Deputy Governor also emphasized the need for a well-structured crypto framework. Woods believe that a proper framework is necessary to attain all the benefits accruable from crypto. According to him:
“Those benefits can only be realised, and innovation be sustainable, if it is undertaken safely, and accompanied by effective public policy frameworks that mitigate risks and maintain broader trust and integrity in the financial system.”
UK Crypto Regulation Development Follows Similar Action Taken by US, EU
The UK is now one of several governments working on cryptocurrency regulation. About two weeks ago, the European Union (EU) tookanother step toward ratifying its proposed crypto bill. As part of its commitment, the EU also exempted language that banned proof-of-work-based digital currencies from its proposed bill. Such digital currencies include Bitcoin (BTC).
Also, across the Atlantic in the US, President Joe Biden recently signed an executive order on crypto into law. This law calls for the need to develop foolproof and clear regulations for the crypto market. The US President is calling for coordinated efforts in studying the digital dollar and the general crypto space. Several experts have viewed the US government’s executive order on crypto as the catalyst for the UK government’s recent move.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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