The UK government wants to become a “global hub” for the crypto industry. “The UK is open for business and open for crypto businesses,” said John Glen, City minister, whilst proposing new regulations for stablecoins, a Royal Mint NFT and a suite of other measures to court digital asset companies.
UK sets out stall for crypto
The speech marked the most emphatic message from the government so far in support of cryptocurrency businesses setting up shop in Britain, after criticism from the industry that the UK’s stringent regulatory approach and indifference from the government was throttling innovation.
“We see enormous potential in crypto,” Glen said. “We aren’t going to lower our standards, but we are going to sustain our technological neutral approach.”
The minister added that the government would study the possibility of issuing government debt using distributed ledger technology.
He said chancellor Rishi Sunak had commissioned the Royal Mint to issue a digital collectible, known as a non-fungible token, by the summer as “an emblem of the forward looking approach we are determined to take”.
The UK’s crypto push comes as firms operating in financial hubs such as the UK and US are ratcheting up pressure on governments, regulators and lawmakers to offer clearer rules and regulations on digital assets.
Financial supervisors have had to balance the potential for crypto tokens to be used for illicit activities against its potential to offer innovative solutions for everything from asset trading to corporate governance.
In a sign that some top policymakers remained concerned over crypto, Bank of England governor Andrew Bailey warned that cryptocurrencies were the new “front line” in criminal scams, adding that the technology had created an “opportunity for the downright criminal”.
The UK Treasury also released long-awaited plans to regulate issuers of stablecoins. One of the Treasury’s proposals is to adapt existing laws that govern electronic money, such as funds stored on mobile phone apps, to cover stablecoins, bringing them under the purview of the Financial Conduct Authority.
This would require stablecoin issuers to hold equal reserves of pounds sterling for the tokens issued, which could not be used for purposes such as lending.
The moves on crypto policy follow clashes between the industry and the FCA around its licensing regime for money laundering controls, which some industry participants have said was pushing firms to move overseas.
The perception that authorities were hostile to crypto had sparked concern about the competitiveness of British financial technology, including among some backbench Tory MPs, at a time when the government had aimed to boost the industry after Brexit.
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