In April, the United Kingdom’s Economic and Finance Ministry, also known as Her Majesty’s Treasury, announced its intention to put the United Kingdom at the forefront of technology by bringing stablecoins under the country’s payments regulation — a bold move that looks especially intriguing in contrast to the recent shock, caused by TerraUSD’s (UST) depegging.
Later, in May, during the annual Queen’s Speech, Prince Charles informed the Parliament about two bills that will support “the safe adoption of cryptocurrencies” and “create powers to more quickly and easily seize and recover crypto assets.”
Taken together, these initiatives give an impression of the nation’s growing interest in digital assets, which comes as no surprise, given the inevitable competition for innovation with the European Union.
The last few months were busy for crypto in Great Britain. Besides some important precedents being set such as the High Court’s decision to recognize nonfungible tokens (NFTs) as property or the listing of Grayscale’s first European ETF on the London Stock Exchange, we witnessed some major announcements by regulators.
The Treasury’s affair with stablecoins
In its announcement on April 4, following a several-month public consultation, the Treasury acknowledged that certain stablecoins could become “a widespread means of payment” for retail customers. It also stated its readiness to “take the necessary legislative steps” to bring stablecoins into a comprehensible regulatory framework.
As the head of tax at Koinly, Tony Dhanjal, explained to Cointelegraph, this announcement should be regarded as huge news or even a game-changer because it will lead to the reclassification of stablecoins in the U.K.:
“Once stablecoins are no longer subject to capital gains tax, spending crypto could become a lot more widespread and we could see the adoption of crypto as a means of payment in mainstream industries.”
The intentions voiced by the Treasury weren’t limited solely to stablecoins; the financial regulator also teased the launch of a Cryptoasset Engagement Group, which will consult with the industry stakeholders; reassessing the country’s tax system in regard to crypto, establishing a “financial market infrastructure sandbox” and even the Royal Mint’s very own NFT.
Even the infamous market crash on the second week of May, particularly painful to the stablecoins’ original promise of zero volatility, didn’t discourage the Treasury. According to the Independent, legislation to make stablecoins a means of payment would be included in the Financial Services and Markets Bill.
What is known now is that the Treasury doesn’t plan to include algorithmic stablecoins, such as UST, in this legislation — only fully-backed stablecoins like Tether (USDT) or USD Coin (USDC) are being considered.
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Seize and recover
The aforementioned Financial Services and Markets Bill, which would possibly include the guidelines for stablecoins, occurred as a part of the Queen’s Speech — a package of 38 legislative projects that was announced to the Parliament on May 10.
In its current form, it doesn’t tell much, though the very language sounds rather benevolent for the industry. The bill aims at “harnessing the opportunities of innovative technologies in financial services,” including:
“Supporting the safe adoption of cryptocurrencies and resilient outsourcing to technology providers.”
For now, the key point of the bill’s announcement is the intention to craft a national framework which wouldn’t copy the EU’s. While it would initially apply to the traditional finance sector, similar requirements for crypto assets are expected.
Another part of the Queen’s Speech that bodes significant for the crypto…
Read More: cointelegraph.com