The UK government has revealed plans to introduce a unified regulatory framework for the cryptocurrency sector in early 2025 at London's City & Financial Global Tokenisation Summit.
Economic Secretary to the Treasury Tulip Siddiq outlined the Labour government’s new approach during the event on Thursday, emphasizing its aim to integrate regulations for stablecoins and staking services into a single comprehensive regime, streamlining the oversight process.
Legislation on the two areas was expected to be passed by the previous Conservative government in the summer, but the UK's general election delayed progress.
“Doing everything in a single phase is simpler and it just makes more sense,” said Siddiq, whose Labour Party secured a landslide victory in the nation's July general election.
As part of the new framework, stablecoins will no longer be regulated under the UK’s existing payment services rules. The government sees those regulations as not suitable for their current use cases. This shift aims to align the UK’s approach with the evolving nature of stablecoins, typically tied to assets like the U.S. dollar, to maintain stability.
The government is also addressing concerns over the classification of staking, a process where users lock up tokens to support blockchain operations and earn rewards. Industry leaders have pushed for staking to be treated as a technology service rather than a collective investment scheme, which would subject it to stricter financial regulations. Siddiq indicated that the government supports this stance, adding, "it doesn’t make sense for staking services to have this treatment and the government intends to proceed with removing this legal uncertainty accordingly."
Paybis founder Innokenty Isers told The Block that the UK government's plan to release its draft crypto and stablecoin framework next year confirms the broader positive shift toward the industry.
"This move is strategic for the UK for two obvious reasons," said Isers. "The EU has a functional crypto regulation through Markets In Crypto Assets (MiCA), and if the UK fails to play catchup with its peers, chances are that it will lose out on the next wave of the financial revolution and the economic opportunities that crypto has to offer. Secondly, the country has to get its books in order, drawing on the positive sentiment that the victory of Donald Trump has ushered into the market."
The UK’s move to introduce new cryptocurrency regulations comes as other major jurisdictions, including the U.S. and the EU, are advancing their own comprehensive frameworks. President-elect Donald Trump has made a concerted effort to attract crypto businesses, while the EU is set to implement its extensive Markets in Cryptoassets (MiCA) regulation by year-end.
The Paybis founder highlighted that with the U.S. planning initiatives such as a crypto advisory role under the Trump administration, there is growing optimism about improved regulations. If these developments unfold as expected, the financial sector will undergo significant changes, potentially attracting high-growth startups and driving economic growth.
"With its planned regulatory changes next year, the UK is positioning itself to gain a competitive edge that could offer long-term benefits," Isers said.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.