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Britain Will Reveal Crypto Regulation Plans In Coming Weeks, Sources Say

OnZine Articles

ByOnZine Articles

Mar 29, 2022
Britain Will Reveal Crypto Regulation Plans In Coming Weeks, Sources Say

According to four industry sources familiar with the matter, the United Kingdom government will soon reveal plans to regulate the cryptocurrency market, focusing on a fast-growing type of token known as stablecoins.

British Finance Minister Rishi Sunak is expected to make an announcement about a new regulatory regime for cryptocurrency in the coming weeks, according to sources who prefer to remain anonymous because the information has not yet been made public.

When CNBC inquired about the plans, the Treasury declined to comment.

Details of the plans are still being finalized, but sources who spoke with CNBC say they are likely to be favorable to the industry, providing legal clarity for a sector that has previously been largely unregulated.

According to the sources, Treasury officials have demonstrated a willingness to comprehend the complexities of the crypto market and so-called stablecoins, which are digital assets whose value is derived from existing currencies such as the US dollar.

The department has held discussions with a number of businesses and trade associations. According to one of the sources, this includes the Winklevoss brothers’ cryptocurrency exchange Gemini. The Gemini dollar is a stablecoin issued by Gemini that is pegged to the US dollar.

Stablecoin usage has increased exponentially in recent years, coinciding with rising interest in cryptocurrencies in general. Tether, the world’s largest stablecoin, now has a total circulating supply of over $80 billion, up from around $4 billion two years ago.

However, regulators are concerned that the tokens may not be fully backed by an equivalent amount of reserves and are being used for money laundering and other illegal activities.

Meanwhile, regulators are concerned about the financial system’s exposure to bitcoin and other digital currencies, as well as their potential use to circumvent sanctions imposed on Russia as a result of its invasion of Ukraine.

Risks to financial stability

The Bank of England called on policymakers on Thursday to broaden regulatory frameworks to limit the risks posed by cryptocurrency to financial stability.

In a letter to several bank CEOs, BOE Deputy Governor Sam Woods stated that there has been “increased interest” from banks and investment firms in “entering various crypto markets.”

According to the sources, the Treasury’s move is being seen as a response to President Joe Biden’s executive order calling for coordination among various U.S. federal agencies on crypto regulation. Several industry insiders have lamented the absence of similar action in the United Kingdom.

A number of companies, including Revolut, Blockchain.com, and Copper, may be forced to close their crypto operations in the United Kingdom this week if they do not register with the Financial Conduct Authority’s crypto-asset register by March 31 deadline.

According to the FCA, a “significant number” of cryptocurrency businesses are failing to meet anti-money laundering requirements. Only 33 businesses have been added to the register. More than 80% of the firms evaluated by the regulator have either withdrawn or been rejected.

 

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OnZine Articles main author - Max Haydon

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