The UK is working on introducing comprehensive stablecoin legislation by the summer of 2024. Economic Affairs Secretary Bim Afolami made the announcement at the recent Innovate Finance Global Summit, emphasizing the government’s commitment to establishing a sound regulatory environment for crypto-related activities.
Table of contents
ToggleBased on the Financial Markets Act 2023
In June 2023, the UK passed the key Financial Markets Bill to integrate stablecoins and other cryptocurrencies into regulated financial activities. This foundational bill sets the stage for detailed regulation of all aspects of the crypto space, including staking, exchange operations and digital asset custody.
Comprehensive UK regulation is coming
Afolami detailed the steps the UK government will take to bring crypto asset activities under formal regulatory purview. “We are now accelerating legislation to implement our final proposals and systems,” he said. With this legislation, activities such as operating cryptocurrency exchanges and custody of customer assets will be included in the regulatory scope.
This regulatory framework has been developed with key insights provided by local regulators including the Financial Conduct Authority (FCA) and the Bank of England (BoE). In early 2023, the agencies explored the possible structure of a stablecoin regime, deciding that the BoE would oversee providers with an impact on the financial system, while the FCA would oversee the broader crypto market.
Regime shifts increase uncertainty
Afolami originally revealed plans to push for stablecoin legislation in February this year, with the goal of completing it within six months. However, with the UK approaching an election, the current Conservative-led government is working to make the UK a crypto hub and faces the possibility of being replaced by Labor, leaving some crypto initiatives in limbo.
