According to the latest reports, the UK government is set to establish its regulatory approach for the cryptocurrency sector in order to maintain the country’s attractiveness as a destination for cryptocurrency businesses.
The move follows Donald Trump’s election victory in the United States, a development that has sparked excitement within the crypto industry due to its promises of favorable regulation.
Legislative roadmap for UK crypto businesses
The UK Treasury plans to propose legislation addressing two key areas of the crypto space: stablecoins and staking services. Stablecoins, digital assets linked to more stable values such as fiat currencies, will soon be subject to regulatory discussions under the Financial Conduct Authority (FCA).
Bloomberg reported that the focus will also be on “creating” a new classification for staking services, which will allow token holders to support blockchain networks and earn rewards.
The Treasury’s announcement is notably seen as an attempt to restore momentum previously stalled when the Conservative government of former British Prime Minister Rishi Sunak lost its footing in the general election. Sunak initially aimed to make the UK a leading global hub for digital assets.
With new leadership from Prime Minister Keir Starmer’s Labor government, industry stakeholders have been awaiting clarity on the proposed legislation.
The FCA is preparing to present its regulatory roadmap, including a phased rollout for various crypto segments, starting with stablecoins. The upcoming framework, as stated, is expected to help “guide businesses on compliance and operations” in the UK market.
Concerns remain among crypto companies over allocating resources to the UK market due to delays in regulatory clarity. The executives highlighted that the European Union’s Markets in Crypto-Assets (MiCA) regulation is close to being fully implemented, providing a competitive benchmark.
This has led to calls for the UK to quickly seize what industry leaders see as a “second-mover advantage”. Industry body the Crypto Council for Innovation has highlighted that the UK can still establish itself as a key player in the crypto space if it acts decisively.
A step towards clarity in a context of global competition
It is worth noting that the UK government’s efforts to regulate crypto do not appear to focus solely on short-term market dynamics. The proposed regulatory approach is part of a broader initiative to “ensure the long-term viability and growth of the digital assets sector.”
In addition to planned legislation on stablecoins and staking, the government plans to provide updates on the digital securities sandbox, an initiative aimed at fostering blockchain experimentation.
Jointly managed by the FCA and the Bank of England, the sandbox provides a testing ground for innovative projects in a controlled environment.
Featured image created with DALL-E, chart from TradingView
