In the next weeks, the UK Finance Ministry will publish a new regulatory framework for cryptocurrencies, with a focus on stablecoins.
According to sources acquainted with the situation, the new regulations will be favorable to the crypto industry, adding some clarification to the current standards’ ambiguity. Treasury officials have showed a willingness to learn about the crypto industry, according to reports, working with crypto enterprises and trade groups, such as the Gemini exchange.
Gemini creates its own stablecoin that is pegged to the US dollar. Tether, the largest stablecoin in the world, now has a supply of over $80 billion, up $76 billion in two years. Despite the popularity of stablecoins, regulators are concerned that the coins may not be backed by sufficient fiat currency reserves, and that criminals are using them to launder money and engage in other illicit acts.
The United Kingdom is following in the footsteps of the Biden administration.
The Bank of England has urged regulators to reduce the dangers of cryptocurrencies to financial stability. The Bank of England’s Deputy Governor wrote letters to a number of bank CEOs, claiming “increased interest” from banks and financial firms wishing to enter various crypto marketplaces. This comes after US President Joe Biden urged multiple US Federal Agencies to coordinate efforts on crypto regulation, giving research projects to departments ranging from Treasury to Commerce on a variety of themes, including the development of a government-backed stablecoin. The new executive order, according to White House National Economic Council Director Brian Deese and National Security Adviser Jake Sullivan, “identifies the administration’s policy intentions, both for cryptocurrencies and any eventual US Central Bank Digital Currency.”
Although the government has recruited the expertise of the Massachusetts Institute of Technology in exploring a central bank digital currency, many crypto sector insiders criticize the lack of equivalent governmental cooperation in the UK.
The FCA registration deadline is approaching.
If they do not register on the Financial Conduct Authority’s crypto-asset register by March 31, 2022, a few crypto firms in the UK may be compelled to shut down. The Financial Conduct Authority in the United Kingdom will only register crypto companies if the FCA determines that their anti-money laundering measures match FCA requirements. The FCA has rejected or withdrew the applications of almost 80% of the businesses it has reviewed.