The UK is gearing up to roll out a new regulatory framework for crypto assets, wanting to catch up with Europe and the U.S., where a pro-crypto president has just been elected.
Now the official sources say we can expect a draft of these regulations early next year.
A shift in government
Some regulations were anticipated much earlier, but those plans were derailed by a general election that brought in Keir Starmer’s Labour government, replacing the Conservative administration led by Prime Minister Rishi Sunak.
Now, the Labour government is ready to take the reins on crypto regulation.
Economic Secretary to the Treasury Tulip Siddiq stated that the upcoming regulations will address various aspects of the crypto world, including stablecoins and staking services.
She emphasized that it makes more sense to tackle everything in one go rather than piecemeal.
Old rules, new services
Siddiq pointed out that stablecoins don’t quite fit into existing payment services regulations and that legislation around them has been brewing since a series of discussion papers were released in October 2023, but these rules weren’t expected until 2025 at the earliest.
The crypto industry is particularly interested on ensuring that staking services aren’t classified as collective investment schemes, which would impose extra restrictions.
Siddiq reassured attendees at the summit, saying, it doesn’t make sense for staking services to have this strict treatment, and promised that the government intends to clear up any legal uncertainties surrounding it.
The previous Conservative government had lofty ambitions of making the UK a cryptocurrency hub, but many see it as having a tough regulatory environment.
Much of this blame falls on the Financial Conduct Authority, which operates independently from the government and has been criticized for its approach.
It was a special moment for me to deliver the first Labour Mansion House statement to Parliament in 14 years.
I outlined our vision for growth, which is to support financial service innovation, streamline duplicative regulation and uphold the UK’s reputation for high standards. pic.twitter.com/GnYfth9Y5P
— Tulip Siddiq (@TulipSiddiq) November 18, 2024
Politicians are grandmasters in f*cking things up
The European Union is moving ahead with its Markets in Crypto-Assets, the MiCA regulation, set to take effect by year-end.
With Europe providing regulatory clarity and Trump’s incoming administration in the U.S. viewed as pro-crypto, the UK risks losing its appeal to the booming crypto industry.
While the former government promised new crypto regulations back in July, those never materialized.
So far, the Labour government’s only action on crypto regulation has been a bill introduced in September aimed at clarifying the legal status of non-fungible tokens, cryptocurrency, and carbon credits by designating them as property.
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