UK plans to introduce crypto regulatory framework early next year
The UK government announced at the City and Financial Global Tokenization Summit in London that it would implement a unified regulatory framework for the cryptocurrency industry in early 2025.
During the event on Thursday, Tulip Siddiq, the Economic Secretary to the Treasury, presented the Labour government's new strategy, highlighting its goal of integrating stablecoin and staking service regulations into a single, comprehensive regime, thus simplifying the oversight procedure.
Dante Disparte, Circle's global head of policy, said in October that stablecoin regulations in the United Kingdom should be put into place in a few months.
Existing Regulations Will No Longer Apply to Stablecoins
The previous Conservative government was supposed to pass legislation on the two areas in the summer, but the July UK general election caused a delay.
Siddiq said, “Doing everything in a single phase is simpler, and it just makes more sense.”
Stablecoins will no longer be subject to the UK's current payment services regulations as part of the new framework. According to the government, those rules are not suitable for their present use cases. This change aims at bringing the UK's approach into line with stablecoins' evolving nature, which are usually linked to assets like the US dollar to maintain stability.
Staking and stablecoin services
Concerns regarding the classification of staking—a process where users lock up tokens to support blockchain operations and receive rewards—are also being addressed by the UK government. Leaders in the industry have advocated for staking to be governed by more strict financial regulations as a technology service as opposed to a collective investment scheme.
Siddiq said, "It doesn’t make sense for staking services to have this treatment, and the government intends to proceed with removing this legal uncertainty accordingly."
EU plans to implement MiCA
The UK's decision to enact new cryptocurrency laws coincides with the development of comprehensive frameworks in other significant jurisdictions, such as the US and the EU. As the EU prepares to enact its comprehensive Markets in Cryptoassets (MiCA) regulation by year's end, President-elect Donald Trump has made a determined effort to draw in cryptocurrency companies.
UK's expanding cryptocurrency market
Given the expanding number of markets in Great Britain, the long-awaited regulations are important to the advancement of the industry. In the UK, about 2.5 million adults, or 5% of the total population, own cryptocurrency.
Additionally, the market size and trading volume both increase significantly, by about $170 billion and $8.5 billion, respectively. In 2022, the industry will benefit from over $1.9 billion in venture capital funding for blockchain and cryptocurrency startups.
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