Regulation Ahead in UK for Cryptocurrencies

“Stablecoins” are on their way to the UK. It’s part of a plan by the Government that they hope will see the UK becoming a hub for digital payment companies.

The idea of stablecoins such as Binance USD and Tether is that they have a stable value. This is achieved by linking them to assets such as gold or traditional currencies. That cuts out one of the key problems that people have regards cryptocurrencies. Many are fearful of the volatility in value of cryptocurrencies such as Bitcoin.

Another plan by the treasury is to regulate more digital currencies in the second half of 2022. There has been no comment on which are being considered.

The Chancellor Rishi Sunak wants to see more cryptocurrency businesses opening in the UK. This will create new jobs, but efficient regulation is needed. He believes that this will “give them the confidence they need to think and invest long-term.” Regulation is an important step as this will ensure that the public can use them safely.

John Glen is the UK Financial Services Minister and he’s spoken about how the government views cryptocurrencies with the opinion being that they have “enormous potential.” Therefore, the UK government has a “detailed plan” that will see the potential of blockchain harnessed. They also wish to support the development of “a world-best crypto ecosystem.”

The hope is that by the government “making this country a hospitable place for crypto” this will bring about investment in the future.

Another area of concern regarding cryptocurrencies is the level of carbon emissions they generate. Mr Glen said that the government will look closely at energy usage figures.

There is still the fear that as cryptocurrencies become more popular, established financial systems will be threatened. With transactions carried out using cryptocurrencies, there is no involvement by the traditional banks. That is something that makes them attractive to users.

December 2021 saw the deputy governor of the Bank of England Sir Jon Cunliffe state that around 0.1% of UK wealth was in digital assets. That figure is due to increase as the months go by. The problem of this says the deputy governor is what would happen if there was a fall in how much cryptocurrencies are worth.

The Treasury have also announced that they will be asking the Royal Mint to create a Non-Fungible Token (NFT). This is expected to happen this summer and they will be able to be bought and sold in the digital world.

They were first used eight years ago and are like certificates of ownership for either physical or virtual assets. One advantage with them is they can’t be replicated or copied. This is due to each NFT possessing a unique digital signature.