Responding to Economic Secretary to the Treasury Tulip Siddiq, the United Kingdom is prepared to enact suppletive guidelines for technological money by the early half of 2024. Siddiq laid out the government’s plans at a conference on Thursday in London, which expect a unification of the rules governing stablecoins and staking services into a single framework.
“It’s just more practical to do everything in one phase,” Siddiq said, adding that the government has planned to centralise supervision and eliminate arbitrary aspects of the law in the burgeoning crypto space.
UK Aims to Clarify Stablecoin and Staking Rules in New Crypto Framework
Pay date and payment transaction rules: Stablecoins – such as digital assets backed by fiat currencies, including the US dollar – will no longer be regulated as traditional payment services under the proposed framework. It’s stability, Siddiq pointed out, that the current classification does not accurately represent the developments in the use cases of stablecoins and their positions in the overall environment.
Moreover, the framework focuses on staking services where investors retain some tokens to help power the blockchain. Siddiq sought to reassure the people in government that they are working to ensure that staking – which the industry has urged to keep out of the C IS – is well clarified.
“For me, it doesn’t make sense for staking services to be treated this way,” Siddiq said at the Tokenisation Summit. It will be pertinent to note that we will address this issue accordingly.
The measures were expected initially under the earlier Conservative government but could have run into trouble after the July general election, which saw Keir Starmer’s Labour Party come into power.
The United Kingdom’s renewed push for regulating cryptocurrencies arrives in concert with its bid to remain competitive in a world of increasingly clear rules on emerging financial technologies. The Markets in Cryptoassets (MiCA) regulation is well underway in the European Union and should be ready by the end of this year. At the same time, in the United States, efforts are being made to regulate stable coins under the Trump administration- elect.
Dante Disparte, global head of policy at Circle, said in October that he believed the U.K. would add stablecoin regulation within months. ‘‘I think it’s months, not years; we’ll be waiting for it’’ Disparte said, as organizations await regulation.
Stability of the stablecoins and their challenges in the US Market
It also underlines the divergence of the regulatory trials for the UK and the US; the latter still hosts an unregulated stablecoin market above $140bn.
In such attempts, senators, including Cynthia Lummis and Kirsten Gillibrand, offered new legislation to provide payment stablecoins. Conceptually, the bill contains definitional, issuers’ operational and reserve requirements and prohibits the classification of stablecoins as securities. However, there are still critical loopholes regarding the regulation of cryptos, which makes America less favourable for operations than the EU and, now, the U.K.
With the appearance of such rules, the United Kingdom became one of the first countries to provide the cryptocurrency industry with opportunities for growth and the companies that are afraid of floating in an uncertain legal environment. Since it deals with legal issues and puts them in line with other countries, the United Kingdom wants to become a leader in the market of digital assets.
Market participants will now wait for the details of the framework, which, if delivered, will be a watershed moment for cryptocurrency in the UK.
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