The UK government is set to introduce new regulations for stablecoins and cryptocurrency staking services within the next six months, according to Bim Afolami, Secretary to the Treasury for Economic Affairs.
Speaking at an industry event hosted by Coinbase in London on Monday, he added that the government was “working very hard” to put in place legislation for the ledger.
The Treasury promised in October to clarify regulation of the cryptocurrency sector by 2024. Since then, the Treasury has held several consultations on fiat-backed stablecoins and the enactment of the Financial Services and Markets Act.
Market experts have predicted that fiat-backed stablecoins will fall under existing payment laws, leading to increased oversight by financial regulators of asset-backed digital tokens.
Coinbase itself has always been heavily involved in the governance of the USDC stablecoin. Last summer, the San Francisco-based cryptocurrency exchange acquired a stake in Circle. Accordingly, Center, the consortium that managed USDC, was disbanded. Circle also issues the 1:1 Euro-backed stablecoin EUROC, which it launched in 2022.
The UK government plans to classify staking, a mechanism by which token holders can earn rewards for supporting blockchain operations, in a way that avoids classification as a collective investment. This would likely be good news for Coinbase, which has faced backlash from regulators over its staking service for US customers.
Despite these developments, the broader regulation of cryptocurrency exchanges and industry services remains uncertain, and there is no clear timeline for legislation. Chancellor Rishi Sunak’s 2022 pledge to establish the UK as a leading cryptocurrency hub has met with minimal regulatory progress, with industry insiders citing the lack of clear rules as a significant operational hurdle.
And it’s worth pointing out that Apolami did not offer a timeline for comprehensive cryptocurrency regulation, instead emphasizing the broad scope of the legislative efforts currently underway.
Last October, the UK government enacted new rules to make it easier for authorities to seize cryptocurrencies linked to illegal activity, especially without a prior conviction. This is a step forward from regulations that previously allowed law enforcement to provide funds for free but could not seize them until the individual was arrested and convicted.
