A senior person from Circle, the issuer of USD Coin (USDC), said that the United Kingdom is planning to pass legislation on stablecoins within the next few months. This development is a major boost for the UK as it seeks to begin governing the use of digital assets as stablecoins surmount the globe.
In a CNBC Interview, Circle Global Head of Policy Dante Disparte explained that the UK may pass stablecoin legislation in months, not years. Disparte’s comments come after the increasing adoption of stablecoins, as their overall market cap hits almost $170 billion by Q3 of 2024.
Traditional asset-backed tokens, cryptocurrencies anchored to real-world assets such as the US Dollar, have gained popularity because they enable speedy cross-border transfers and do not pose a risk associated with Bitcoins and other volatile cryptocurrencies. As this growth has unfolded, regulators worldwide have begun paying more attention to the stability, transparency, and risks inherent in the stablecoin tentacles.
So, while the European Union adopted a wide-ranging regulation of digital assets through the Markets in Crypto-assets (MiCA) earlier this year, the United Kingdom has been slower with standalone legislation. MiCA addresses stablecoins and other cryptocurrencies as well. It provides norms for a base legal framework, consumer safeguards, and dependability of new forms of a clear market financial system across Europe.
UK Shifts Regulatory Focus Under New Labour Government
On the other hand, the UK has only recently started to develop measures to regulate the space. This week, an amendment was brought to the British Parliament to put digital assets under the rubric of personal chattels under English law. Justice Minister Heidi Alexander pointed out that the introduced bill allows for regulating fraud cases and ownership disputes, recognizing crypto as valuable assets.
The current scenario has its regulatory structure in the UK changed since the change of guard from the Conservative government under Rishi Sunak to the present Labour regime. During Sunak’s tenure, there was a clear desire in the UK to create the country as the leader in the adoption of cryptocurrencies, and stablecoins regulation was a part of that. However, this changed after the election of a new government, where little emphasis was placed on regulating the use of cryptocurrencies.
Recent trends in stablecoin regulation point to a shift in this state because of pressure from the financial sector and international regulations like MiCA, which state that it is high time to define stablecoin. Proponents say holistic legislation might enable Britain to harness the advantages of speed, efficiency, and financial innovation while countering threats like fraud, customer protection, and market stability.
Before the United Kingdom develops its stablecoin laws, it is crucial to understand how this framework will complement the rest of the European and global jurisdictions. For the UK, the timing and content of these regulations might define the country’s standing in the emergent crypto space.
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