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IFGS 2022: HM Treasury confirms regulation of stablecoin use

IFGS 2022: HM Treasury confirms regulation of stablecoin use

Speaking at the Innovate Finance Global Summit (IFGS) conference on Monday, Economic Secretary to the Treasury John Glen announced that legislation will be introduced to bring certain stablecoins into the UK payments framework, as well as projects to tackle broader crypto regulation and decentralised autonomous organisations (DAOs).

In response to the Treasury’s consultation launched in January 2021, Glen told IFGS attendees “today we are publishing our response, as part of which I can confirm that we will be legislating to bring certain stablecoins into our payments framework, creating conditions for stablecoin issuers and service providers to operate and grow in the UK.”

He continued that this will enable consumers to use stablecoin payment services with confidence, and the government will introduce this legislation as part of an ambition to deliver a world leading regulatory regime for stablecoins.

Focusing first on areas of immediate potential concern, Glen explained that while the focus remained at first on stablecoins, regulators are now widening the lens.

“We think the market has changed sufficiently for us to look at regulating the broader set of crypto activities, including trading tokens like Bitcoin, and we will consult on a world leading regime for the rest of the crypto market too.” Treasury will also be establishing a high-level industry group for crypto asset engagement, to provide guidance on the regulatory regime – a direct open channel for communication with senior representatives from the FCA and business.

He explained that the government should be thinking of regulation as a static or rigid thing. Rather, it should be considered in terms of a ‘regulatory code’ which is refined, tailored, and proportionate, but also nimble and technical, shaped by input from the industry,

“Looking ahead, the legal landscape will also be crucial. English law and our world leading legal services and courts are already a huge asset and can play a big part in making the UK an attractive hub for all things digital and for new technologies.”
Treasury is also asking the Law Commission to undertake a new project, to consider the legal status of DAOs.

The FCA has today also announced that they will be organising the first in a series of crypto sprints next month, which will work toward informing the FCA’s policy in real time.

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