The UK aims to expedite the pace of regulation for stablecoins and staking. Bim Afolami, economic secretary to the British Treasury, stated that the government is “pushing very hard” to achieve regulation covering stablecoins and cryptocurrency staking, as reported by Bloomberg. Notably, Rishi Sunak, the current UK Prime Minister, was one of the early proponents of stablecoins as a payment method during his tenure as Chancellor of the Exchequer. The Financial Markets and Services Act passed in 2023 in the UK repeals hundreds of laws from the EU and recognizes cryptocurrency trading as a regulated financial activity.
The regulation of cryptocurrencies worldwide
The statements from the British economic secretary come four months before the provisions on stablecoins in the Markets in Crypto-Assets Regulation (MiCA) of the European Union come into effect. Under MiCA, stablecoin issuers must obtain regulatory authorization and comply with strict standards of transparency, capital, and consumer protection.
Regarding staking, Swiss company Taurus, chosen by Banco Santander and Deutsche Bank to custody their cryptocurrencies, recently partnered with Lido to bring Ethereum staking to banks. Lido is a staking protocol that allows cryptocurrency holders to stake while still using them in decentralized finance (DeFi) applications.
The stablecoin industry awaits European regulation: new regulations debut in June
In the United States, the Securities and Exchange Commission (SEC) considers crypto staking as a securities trading activity. This was reflected in the lawsuits filed against Kraken and Coinbase. Currently, it is unclear what perspective British regulation will address for cryptocurrency staking.
United Kingdom stablecoins
United Kingdom passes law to confiscate crypto assets more easily
Regulated cryptocurrency exchanges in the UK, such as Coinbase, Gemini, or Crypto.com, have had to adapt their platforms to comply with certain regulations. For example, they began implementing investment questionnaires and risk assessments for their customers. Exchanges also have to comply with strict advertising regulations for cryptocurrencies. Between October and December 2023, the Financial Conduct Authority (FCA) issued over 450 alerts related to illegal cryptocurrency advertisements.
United Kingdom seizes £1.7 billion in bitcoin from China fraud
The transformative potential of stablecoins in the payments industry has been recognized by sector giants like Mastercard, Visa, or PayPal. The latter launched its own stablecoin linked to the US dollar, PayPal USD (PYUSD), last year. Although it did not have significant growth initially, its potential seems to target both digital payments (Web2) and decentralized finance or DeFi (Web3). Due to this potential and growth, stablecoins are under scrutiny by crypto regulations.