UK Aims to Become Global Crypto Hub, Exchequer Says

Among the initial steps will be legislation to recognize stablecoins as legitimate vehicles for payments.

AccessTimeIconApr 4, 2022 at 4:55 p.m. UTC
Updated Jul 26, 2022 at 2:35 p.m. UTC

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

The U.K. government on Monday announced a series of initiatives toward its goal of making the country a global center for crypto technology and investments.

“The measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” Chancellor of the Exchequer Rishi Sunak said in a press release.

One of the first steps will be to bring stablecoins into the U.K. payments system, according to Sunak’s statement and to comments made by John Glen, a minister of state at the Treasury, at the Global Finance Summit.

"This will enable consumers to use stablecoin payment services with confidence,” Glen said. “The government will introduce this legislation as part of an ambition to deliver a world-leading regulatory regime for stablecoins."

In 2019, the Financial Conduct Authority (FCA), the U.K.'s financial regulator, published a report on crypto that said that crypto firms with digital assets for cross-border payments could be subject to payments services regulations but that the tokens themselves wouldn’t be regulated.

Taxes

Meanwhile, the Treasury is looking to engage closely with the public on changes it wants to make to the tax system. "We don't think the tax code will need major surgery to make it work more easily for crypto," Glen said.

“The U.K. is also playing a leading role in negotiations on the new tax reporting framework to enhance tax transparency and consumer confidence while enabling a level playing field in tax reporting globally,” he added.

Additionally, the U.K. Treasury will aim to resolve specific issues like the treatment of decentralized finance loans and staking. Plus, it will amend the investment manager exemption to remove any stipulations that discourage U.K. fund managers from including crypto assets in their portfolios.

Decentralized autonomous organizations (DAO) haven't escaped U.K. regulator scrutiny. The Treasury asked the Law Commission, an independent body tasked with making sure laws in England and Wales are fair, to consider the legal status of DAOs. A DAO is a blockchain-based organization or company that is usually governed by a native crypto token, with anyone holding the tokens able to vote on important company decisions.

The crypto regime

In addition to the stablecoin legislation, the Treasury is marching on with broader plans to set up a “world-leading regime … [facilitating] safe and sustainable and I hope, rapid innovation,” Glen said.

The government will form a industry group called the "Crypto Asset Engagement Group" to help guide the next steps in regulation. The chairman of that group will be at the ministerial level, and the group will include senior representatives from the FCA, Bank of England and businesses, Glen said. It will meet up to eight times a year.

There are also plans for legislation establishing a financial market infrastructure, or “sandbox,” that will enable firms to test distributed ledger technology.

Meanwhile, the FCA will hold a two-day "CryptoSprint" in May, where it will seek views from the industry on issues related to developing crypto regulations.

An NFT?

As icing on the cake, Glen said, the U.K. government has asked The Royal Mint to create a non-fungible token (NFT) that will be issued during the summer as “an emblem of the forward-looking approach we are determined to take.”

CORRECTION (April 5, 08:13 UTC): Corrects Glen's title, removes extraneous full stop in third paragraph; adds dropped word in 11th. Removes "and enable" from 12th.

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Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

CoinDesk - Unknown

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.