After the recent shock of TerraUSD’s (UST) de-pegging, the Economic and Finance Ministry of the United Kingdom, officially known as Her Majesty’s Treasury, declared in April that it intended to place Britain at the forefront of technology by including stablecoins in the country’s payments regulation.
There will be two laws to assist “the safe adoption of cryptocurrencies” and to “create powers to more quickly and easily seize and recover crypto assets.” It’s hardly surprising that the United Kingdom is stepping up its efforts to compete with the European Union in digital assets, as seen by these measures.
Great Britain’s crypto community has had a hectic few months. Not only did we see precedents being set, like the decision of the UK’s High Court to recognize non-fungible tokens (NFTs) as property, but we also saw Grayscale launch its first European ETF on the London Stock Exchange.
Stablecoins: The Treasury’s affair
After a protracted public engagement, the Treasury acknowledged on April 4 that stablecoins might become a mainstream means of payment for retail customers. It said it was ready to take legislative steps to regulate stablecoins. Tony Dhanjal, Koinly’s Head of Taxation, said stablecoins in the UK will be categorized as currency.
If stablecoins are no longer taxed, Cryptocurrency could become increasingly widespread in mainstream enterprises. The Treasury’s stated ambitions weren’t limited to stablecoins though; the financial regulator also hinted at a Cryptoasset Engagement Group, a financial market infrastructure sandbox, and the Royal Mint’s NFT.
The Treasury was undeterred by the May 2 market catastrophe, which destroyed the promise of 0% volatility stablecoins. According to The Independent, the Financial Services and Markets Bill will allow stablecoins to be accepted as payment. The Treasury is only evaluating fully-backed stablecoins like Tether (USDT) or USD Coin (USDC), excluding algorithmic stablecoins like UST.
The Recovery Action Plan
The Queen’s Speech — a package of 38 legislative projects announced to Parliament on May 10 — included the aforementioned Financial Services and Markets Bill, which might potentially incorporate stablecoin requirements. For the time being, the most important aspect of the bill’s announcement is the goal to create a national structure that is distinct from the EU’s.
The Economic Crime and Corporate Transparency Bill is a second section of the Queen’s Speech that holds promise for the crypto business. Referring to digital currencies on a list of risk zones where British enforcers would tighten their grip is, at first glance, unfriendly to digital currencies. As the lone line referencing crypto says, the measure would create authorities to more swiftly and easily collect and reclaim crypto assets, which are the major medium utilized for ransomware.
Is It A Big Step For Brits?
The general perception in the U.K. crypto community is a positive one, Dhanjal says. There is still a commonly held belief that crypto is a criminals paradise. Dhanjal believes that the British financial authorities might even seek their own stablecoin, which would pretty much resemble a central bank digital currency.
Taking Britain Back To The Top
Crypto assets unlock faster settlement, remove credit risk and drop settlement times to near zero, it’s a huge win for commerce. Dhanjal believes the U.K. is unwilling to adopt the general spirit of EU regulations, and that is good news for the country. The chief strategy officer at the data aggregation platform pool says the U.K. needs to become a world leader in crypto innovation and adoption.
The current regulatory sandbox is inflexible and has rejected two-thirds of applicants, he said. Gilbert Hill, the chief strategy officer at blockchain-based data aggregation platform Pool believes the spirit of competition and the urge to justify its separation from Europe will help the nation to make the right decisions.