HM Treasury confirms regulation of stablecoin use

What has happened with crypto regulation?

On 4 April 2022, in a speech made by Economic Secretary to the Treasury John Glen, it was announced that legislation will be introduced to bring certain stablecoins¹ into the UK payments framework, as well as projects to tackle broader crypto regulation and decentralised autonomous organisations (DAOs).

¹ Stable tokens, often referred to as stablecoins, are a type of cryptoasset that can be used to make payments. These tokens are designed to stabilise their value by referencing one or more assets, such as a fiat currency or a commodity.

What was the coverage of the speech?

In a response to HM Treasury’s consultation launched in January 2021, Glen told 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.” The response is available in full here.

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

HM Treasury is asking the Law Commission to undertake a new project to consider the legal status of DAOs.

Other related measures announced on the same day include;

• The government will explore ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the UK. It will review how Decentralised Finance (DeFi) loans – where holders of cryptoassets lend them out for a return – are treated for tax purposes and will also consult on extending the scope of the Investment Manager Exemption² to include cryptoassets.

² a long-standing statutory concession which provides that an investment manager will not constitute a UK representative of a non-resident person as long as certain conditions are satisfied.

• The Chancellor has commissioned the Royal Mint to create a Non-Fungible Token³ this summer.

³ NFTs are assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own. They can be thought of as certificates of ownership for virtual or physical assets.

• The FCA will hold a two day ‘CryptoSprint’ in May with industry participants, seeking views directly from the industry on key issues relating to the development of a future cryptoasset regime. Read our blog on this topic.
• The Economic Secretary will establish and chair a Cryptoasset Engagement Group, convening key figures from the regulatory authorities and industry to advise the government on issues facing the cryptoasset sector.

How can we help you with crypto regulation?

If you’d like to know more about how we can help you with your stablecoin, crypto regulation or any other regulatory compliance issues, our specialist team is here to help.

Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.