Sources claim that the UK will reveal cryptocurrency regulation proposals in the weeks ahead
- Sources tell CNBC that Rishi Sunak, the British finance minister, will announce a new regulatory framework for cryptocurrencies in the weeks ahead.
- The news will focus on stable coins, digital assets valued at existing currencies like the U.S. dollar.
- The Treasury has been in discussions with many companies and trade organizations.
According to four sources in the cryptocurrency market, the U.K. government will soon reveal plans to regulate the sector, focusing on a rapidly developing type of token known as stable coins.
The sources stated that the U.K. finance minister, Rishi Sunak, will shortly announce a new regulatory framework for cryptocurrency. The information has yet to be published, so they preferred to remain anonymous.
When CNBC inquired about the proposals with the Treasury, it declined to comment.
The details of the plans are still being sorted out, but sources who spoke to CNBC said they would most likely be positive for the industry, offering legal clarity for a sector that has so far lacked regulation.
According to the reports, Treasury officials have demonstrated an eagerness to comprehend the intricacies of the crypto market and so-called “stable coins,” digital assets that are backed by real currencies like the U.S. dollar.
The commission is in talks with a variety of companies and trade organizations. Gemini, one of the sources said, is among them. Gemini creates a stable coin called the Gemini dollar linked to the U.S. dollar.
But such coins have also raised concerns for regulators, who are concerned that they may not be fully backed by equivalent reserves and are being utilized for money laundering and other criminal activities.
Meanwhile, regulators are concerned about the financial system’s exposure to bitcoin and other digital currency systems and their potential usage in evading sanctions levied against Russia following its Ukraine invasion.
Financial stability risks
The Bank of England on Thursday called for authorities to expand regulatory limitations on crypto to safeguard financial stability.
“We understand that the Bank of England has discussed these developments with many stakeholders,” the BOE Deputy Governor Sam Woods wrote to several bank CEOs. “There has been an increase in banks and investment firms’ interest in entering various crypto markets,” he added.
According to sources, the Treasury’s move is seen as a reaction to President Barack Obama’s executive order asking agencies across the government to work together on crypto regulation. According to several industry experts, the United Kingdom has been slow in taking similar measures.
If they miss the Financial Conduct Authority’s deadline of March 31 for being included on the crypto asset register, numerous firms, including Revolut, Blockchain.com, and Copper, may be forced to cease their cryptocurrency activities in the United Kingdom. This week.
The FCA states that a “high proportion” of crypto firms fail to follow the necessary anti-money laundering procedures. Only 33 businesses have been accepted onto the list.
More than 80 per cent of those evaluated by the regulator have either withdrawn their applications or been rejected.
Key points to take away
- According to unnamed sources, the regulatory framework will focus heavily on stable coins, which are cryptocurrencies that are linked to the value of other assets.
- According to the report, the Treasury Department has held discussions with many cryptocurrency companies, including Gemini, which issues GUSD, a stable coin pegged to the U.S. dollar.
- The European Union’s landmark regulatory framework for crypto assets, moving through the bloc’s complicated legislative process, emphasizes stability.
- The U.S. Congress is also considering specific rules for stable coins to address potential threats they may pose to financial stability.
ON THURSDAY, the U.K.’s financial watchdogs issued a study expressing concerns about crypto adoption’s potential financial dangers.
- According to a report in the Sunday Times, Rishi Sunak, Britain’s finance minister, will reveal the government’s regulatory plans for crypto imminently.