The United Kingdom is gearing up to roll out an all-encompassing regulatory framework for its cryptocurrency industry at the start of next year.
During a recent conference in London, Tulip Siddiq, the Economic Secretary to the Treasury, announced that the proposed framework will integrate regulations governing stablecoins—digital currencies linked to stable assets like the U.S. dollar—and staking services into a cohesive regulatory structure.
“Addressing everything in one go simplifies the process and makes more logical sense,” Siddiq remarked.
Major Changes Ahead for Stablecoins
Under the new regulations, stablecoins will no longer be categorized under the current payments services framework. Siddiq emphasized that this existing classification does not adequately accommodate the evolving applications of stablecoins.
This regulatory initiative comes as the UK aims to enhance its competitive edge against the United States, where the newly elected administration of President-elect Donald Trump is actively engaging with crypto businesses.
Industry Hesitation Due to Legislative Delays
The delay in legislative action has caused some crypto firms to reconsider their investments in the UK, especially with the European Union's Markets in Crypto-assets (MiCA) regulation set to be implemented by the end of this year.
The industry has also advocated for staking services—where users lock up their tokens to aid blockchain activities—to be exempt from designation as collective investment schemes, which would subject them to stricter regulatory oversight. Siddiq supported this viewpoint, asserting the government's commitment to clarify the legal status of staking.
“At the Tokenisation Summit, I expressed my view that it’s illogical for staking services to be managed in this manner,” she stated. “We will address this matter appropriately.”
In October, Dante Disparte, Circle’s global head of policy, indicated that the UK is expected to finalize its framework for stablecoins within a few months. “I believe we are looking at a timeline of months, not years,” he noted regarding the forthcoming stablecoin regulations.
A Contrasting Landscape in the US
Importantly, the stablecoin sector, currently valued at over $140 billion, remains largely unregulated in the United States. Recently, Senators Cynthia Lummis and Kirsten Gillibrand collaborated to introduce a new bill aimed at establishing regulatory guidelines for stablecoins.
The proposed legislation would impose reserve and operational obligations on payment stablecoin issuers, necessitating the establishment of subsidiaries devoted to stablecoin issuance. The bill categorizes payment stablecoins as digital assets pegged to the U.S. dollar that are intended for payment or settlement purposes.
Issuers would be required to offer conversion to dollars, and these digital assets would not be classified as securities. Only non-depository trust companies registered with the Federal Reserve Board or depository institutions authorized as national payment stablecoin issuers would be eligible, with oversight from both state and federal regulatory bodies.
As the UK moves towards clearer regulations, the crypto industry watches closely, anticipating significant changes that may better support innovation and investment in the sector.
