The UK announced on Monday to accept stablecoins as a valid form of payment and has set plans to make Britain a global hub for crypto-asset technology and investment.
The government plans to regulate stablecoins to pave a way for their use in the UK as a legal form of payment and also create conditions for stablecoins issuers and service providers to operate and invest in the UK, the official website of the UK government said.
The announcements come as a part of measures taken by the government to turn the UK into a global hub for crypto-assets technology and investment.
Chancellor of the Exchequer, Rishi Sunak said: “It’s my ambition to make the UK a global hub for crypto-asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country.”
Stablecoins are crypto-assets intended to maintain a stable value as it is typically pegged to a fiat currency such as the dollar.
“With appropriate regulation, they (stablecoins) could provide a more efficient means of payment and widen consumer choice,” the website said.
According to the website, recognizing the potential of the crypto-asset technology and regulating it can help the UK government ensure financial stability and high regulatory standards. By doing so, the government aims to use them reliably and safely.
“We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term,” Sunak said.
The UK also plans to actively explore the benefits of Distributed Ledger Technology (DLT) in UK financial markets, John Glen, Economic Secretary to the Treasury, said. The DLT allows synchronicity and sharing of data in a decentralized manner to achieve greater efficiency, transparency and resilience.
The website also added that “the government will legislate to establish a financial market infrastructure (FMI) ‘Sandbox’ that will enable firms to experiment and innovate in providing the infrastructure services that underpin markets, in particular by enabling Distributed Ledger Technology to be tested.”
The government has also planned to initiate a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.
For further development of the crypto-asset market in the UK, the government has plans to review how DeFi loans – where holders of cryptoa-ssets lend them out for a return – are treated for tax purposes, and also to consult on extending the scope of the Investment Manager Exemption to include crypto-assets.
UK Plans to Mint its NFT
Other announcements include the creation of a non-fungible token (NFT) in the summer under commission from Sunak; and a Cryptoasset Engagement Group, established and chaired by the Economic Secretary – who will convene “key figures from the regulatory authorities and industry to advise the government on issues facing the crypto-asset sector”.
Further details have yet to be released by the government.