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Stablecoins are to be recognised as a valid form of payment and the Royal Mint is making a non-fungible token (NFT), HM Treasury (HMT) has announced.
The UK’s finance ministry has finally unveiled its plans to regulate and encourage crypto innovation in the country.
“It’s my ambition to make the UK a global hub for crypto-asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” said Rishi Sunak, the UK’s Chancellor, in a statement.
The more positive tone being struck by HMT will be music to the ears of an industry that has experienced a slew of clampdowns, putdowns and warnings in recent months.
Although unlikely to be coincidental, the UK’s announcement comes off the back of the European Parliament’s vote on crypto-asset transfer rules, which sources have admonished as anti-innovation and misguided, among other things.
“I can confirm that we will be legislating to bring certain stablecoins into our payments framework, creating the conditions for stablecoin issuers and service providers to operate and grow in the UK,” said John Glen, economic secretary to the Treasury, during a speech at the Innovate Finance Global Summit.
This will also enable consumers to use stablecoin payment services with confidence, he said. “And the government will introduce this legislation, as part of an ambition to deliver a world-leading regulatory regime for stablecoins.”
This could see either the UK’s 2017 Payment Services Regulations or Electronic Money Regulations amended to incorporate stablecoins.
As well as this, the government also plans to introduce a regulatory sandbox for financial market infrastructure, which will explore the benefits of distributed ledger technology (DLT) in UK financial markets.
Similar to the EU's DLT Pilot Scheme, which is likely to start applying at the start of 2023, the sandbox will provide a testing environment for firms to experiment and innovate DLT and other infrastructure services that underpin payments markets.
The UK government also confirmed that it will initiate a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.
The new package also includes the setting up of a crypto-asset engagement group, exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the crypto-asset market, and even working with the Royal Mint, the government-owned body responsible for creating UK coins, to create an NFT.
This will be created by the summer, announced Glen. “It is an emblem of the forward-looking approach we are determined to take, and there will be more details available very soon.
“There’s a genuine opportunity to build on our strengths in fintech, seize the capitalist energy which has already made UK financial services what it is, and use it to unleash the potential of crypto-technologies,” said Glen, adding that the government is set on moving as quickly and responsible as it can on the issue.
