As a seasoned analyst with years of experience navigating the dynamic landscape of financial regulations, I find the upcoming regulatory framework for crypto assets in the United Kingdom both intriguing and slightly overdue. The recent promise by Economic Secretary to the Treasury Tulip Siddiq at City & Financial Global’s Tokenisation Summit is a step in the right direction, particularly given the UK’s previous struggle to create a favorable regulatory environment for the crypto industry.
In early next year, an initial blueprint for regulating digital currencies, or crypto assets, is expected to be finalized by UK authorities, as confirmed during the Tokenisation Summit hosted by City & Financial Global in London on November 21st.
Initially, certain regulations were anticipated to emerge last summer. However, a general election resulted in the overthrow of those plans, as well as the Conservative administration led by Prime Minister Rishi Sunak. Now, the Labour government, which assumed office on July 5, 2024, will be the one to introduce these regulations.
A comprehensive framework
As a researcher delving into the world of finance, I recently came across statements made by Tulip Siddiq, Economic Secretary to the Treasury. She outlined that the proposed regulations would encompass stablecoins, staking services, and cryptocurrencies as a whole. According to Bloomberg’s reports, this is a significant step towards regulating digital assets in our economy.
“Doing everything in a single phase is simpler and it just makes more sense.”
According to Siddiq, the applications of stablecoins don’t align well with current payment service regulations. Legislation for stablecoins has been under development since the publication of a series of discussion papers in October 2023, but it wasn’t anticipated before 2025.
The crypto industry hopes that staking can escape being designated as a “collective investment scheme,” as that brings with it additional restrictions. Siddiq said at the summit:
“For me, it doesn’t make sense for staking services to have this treatment. The government intends to proceed with removing this legal uncertainty accordingly.”
The UK needs to get a grip on crypto
Previously, the Conservative administration had goals to establish the U.K. as a leading center for cryptocurrencies, but thus far, it’s been criticized for having a complex regulatory landscape. Frequently, this image is attributed to the Financial Conduct Authority (FCA), an independent regulatory body not affiliated with the government.
By the year’s end, the European Union’s Markets in Crypto-Assets (MiCA) regulation will be fully implemented. Given the regulatory clarity provided by Europe and the pro-crypto stance of the United States under the Trump administration, the UK is becoming less appealing to the vast crypto industry worth billions.
Previously, the administration had expressed intentions to introduce new rules for cryptocurrencies in July; however, this didn’t materialize. To date, the current Labour government’s only move towards crypto regulation has been a bill submitted in September, aiming to clarify the legal standing of non-fungible tokens (NFTs), cryptocurrency, and carbon credits by classifying them as property.
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2024-11-21 23:33