Rishi Sunak outlines strategy to make UK a 'global hub' for cryptoasset technology
The Government will hold a consultation later this year on developing regulations for a broader range of cryptoassets
The Chancellor of the Exchequer Rishi Sunak has unveiled a blueprint to transform the UK into a "global hub" for crypto assets.
As part of the plan, the government intends to legislate to bring certain stablecoins into the regulatory net, such as complying with current payment rules.
Stablecoins are the cryptocurrencies whose values are pegged to the price of real-world assets, such as existing traditional currencies (pounds, euros, etc).
The government believes that all stablecoins that reference a fiat currency should be subject to regulation.
The approach would "ensure convertibility into fiat money, at par and on demand", financial services minister John Glen said during a speech at the Innovate Finance Global Summit on Monday.
Sunak said it was his "ambition to make the UK a global hub for crypto asset technology", adding that the policies detailed by the government would help to guarantee that companies can "invest, innovate and scale up" in the UK.
With the adoption of cryptoassets, Sunak says that the financial services industry in UK will remain at the forefront of technology and innovation.
The Royal Mint, the government-owned firm in charge of minting coins in UK, has also been asked to create and issue an NFT "before the summer".
NFTs are digital assets that are used to represent ownership of a virtual item like as an artwork or a video game avatar. They are created using the same blockchain technology that underpins many cryptocurrencies.
The fact that celebrities and big corporations have begun to use NFTs has helped them acquire a lot of traction - and a large number of scams - in the last year.
According to Glen, the Bank of England and the Financial Conduct Authority (FCA) will launch a regulatory "sandbox" next year to begin testing and evaluating the use of distributed ledger technologies (DLT) such as blockchain in market infrastructure.
The government says it will investigate the "potentially transformative advantages" of DLT, and believes it can assure financial stability and high regulatory standards by recognising the potential of DLT, which will allow these new technologies to be utilised reliably and safely in the future.
DLT technologies allow data to be synced and shared in a decentralised manner, potentially resulting in increased efficiency, transparency and resilience.
Later this year, the government will hold a consultation on developing regulations for a broader range of cryptoassets, such as bitcoin, taking into consideration their energy consumption.
Furthermore, it intends to look at measures of improving the competitiveness of the country's tax structure in order to stimulate the future growth of the cryptoasset market. It will examine how DeFi (decentralised finance) loans, in which holders of cryptoassets lend them out for a profit, are taxed.
As governments across the world continue to study the $2 trillion cryptocurrency sector, industry insiders have called for more clarification on the UK's stance on cryptocurrency.
Last month, US President Joe Biden issued an executive order pushing government-wide collaboration on crypto regulation. The move was widely seen as positive for the industry as a whole.
Meanwhile, legislators in the EU recently voted against proposals that would have jeopardised the future of crypto mining over environmental concerns. They did, however, approve new restrictions prohibiting anonymous crypto transfers.