Government plans to regulate cryptocurrencies  

Stable coins are cryptocurrencies that are typically pegged to a fiat currency (a government-issued currency that is not backed by a physical commodity like gold, but rather by the government that issued it, such as the dollar). They are intended to maintain a stable value. 

At an event this week, John Glen, Economic Secretary to the Treasury and City Minister, said ministers would legislate to bring certain types of stable coin into “our payment framework”. He wanted to create “the conditions for stable coins issuers and service providers to operate and grow in the UK”.

Glen said the move to legislate was part of a wider shift from government to “to deliver a world leading regulatory regime for stable coins”.

“We think the market is trading sufficiently for us to look at regulating a broader set of crypto activities, including trading of tokens like Bitcoin, and we will consult on a world leading regime for the rest of the crypto market to a regime that facilitate safe and sustainable innovation,” Glen commented.

Glen’s speech came as the Treasury announced a package of measures on 4 April to continue to invest in the UK financial services place “at the cutting edge of technology”.

The Treasury said it will introduce a “financial market infrastructure sandbox” to provide the infrastructure services that underpin markets, which it says will allow firms to “experiment and innovate”. This involves enabling Distributed Ledger Technology to be tested.

A Cryptoasset Engagement Group will be established to work more closely with the industry, and the government will explore ways of “enhancing the competitiveness of the UK tax system” to encourage development of the cryptoasset market.

Chancellor Rishi Sunak has also commissioned the Royal Mint to create a Non-Fungible Token (NFT) this summer. An NFT is a digital asset that exists on blockchain, a record of transactions kept on networked computers.

Sunak said: “We want to see the businesses of tomorrow – and the jobs they create - here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.

"This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation”.