British Government Prepares Legislation for Stablecoins and Crypto Staking, Exchange, and Custody

The British government is making strides in the regulation of stablecoins and crypto activities, with legislation expected to be in place by June or July. Economic Secretary Bim Afolami announced at the Innovate Finance Global Summit that the final proposals for the regulatory regime are being fast-tracked.

The government’s plans include bringing fiat-backed stablecoins under the oversight of the Bank of England, Financial Conduct Authority, and Payment Systems Regulator to minimize potential risks and ensure customer protection. This move is part of the U.K. treasury’s efforts to subject digital asset companies to the same regulations as traditional finance firms while still positioning Great Britain as a global hub for cryptocurrencies.

However, the crypto sector remains largely unregulated globally, with under 30% of jurisdictions having regulations in place, according to a report by the Financial Action Task Force (FATF). T. Raja Kumar, head of the FATF, emphasized the importance of strong regulations to prevent criminals and terrorists from exploiting regulatory loopholes.

In a concerning development, the FBI’s Internet Crime Complaint Center (IC3) reported a significant increase in cryptocurrency scams in 2023, with Americans losing $3.9 billion to frauds and scams. This highlights the urgent need for robust regulations to protect consumers and investors in the rapidly growing crypto industry.

The upcoming legislation in the U.K. is a step towards creating a safer and more secure environment for crypto activities, balancing innovation with regulatory oversight to foster growth and investment in the sector. Stay tuned for further updates on the evolving regulatory landscape for cryptocurrencies in the U.K. and beyond.