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The UK announces new regulations for cryptocurrencies

Photo of: Nathan VDH
by Nathan VDH

Will the stablecoins and cryptos in general end up bowing to increasing regulatory pressure from regulatory authorities in different countries against them? The regulatory process seems to be well oiled today: legislative proposals, a consultation period – to give a semblance of legitimacy to the regulatory framework? – followed by the adoption of a controversial law that ignores the protests of the cryptosphere.

According to a press release dated January 7, 2021, the British Treasury Department published a document detailing a series of proposals for the cryptosphere.

This communiqué marks the launch of a regulatory approach to cryptocurrencies and stablecoins for 2021, following the turmoil related to Brexit.

The main objective of this consultation is to establish a strict regulatory framework around stablecoins, whether at the level of issuing companies or companies providing related services.

The UK Treasury considers that their wide use for payment purposes poses a risk to financial stability.

Nevertheless, it points out that it is clear that Distributed Ledger Technology (DLT) can bring significant benefits to capital markets, potentially transforming the way they operate.

In 2018, the British government set up a working group to assess the impact of the rapid development of the cryptocurrencies market on the economy.

The Treasury wants to ensure that this regulatory framework is appropriate to harness the benefits of new technologies, support innovation and competition, while mitigating risks to consumers and stability.

The document signed by Treasury Secretary John Glen says this approach is the first step in a consultative process with the crypto industry. The government particularly emphasizes the significant importance of a risk-based approach to regulation.

Glen says the government will continue to monitor this market and emerging risks as it matures. The consultation period is open until March 21, 2021.

How many Stablecoins will survive the various regulations and be able to compete with CBDCs? Brad Garlinghouse may not be entirely wrong when he talks about a general action against cryptocurrencies when he talks about the legal mishaps of Ripple (XRP) which will soon face the SEC in court. His Majesty’s Treasurer wants to protect the Book at all costs. The British have divorced from Europe, is their love for cryptocurrencies stronger?