Post-Brexit UK engages crypto industry to define stablecoin

Post-Brexit UK engages crypto industry to define stablecoin rules

As well as defining stablecoins, the UK would like to establish how similar its crypto rules will be to those of other countries

Her Majesty’s Treasury has sought comments from the crypto industry on potential regulations.

Announcing a public consultation phase on Thursday, the UK Treasury Department asked the crypto community for their views on a range of proposals:

„The government invites views from a wide range of operators, and in particular companies involved in crypto assets.“

Although Brexit formally became effective early last year, the New Year marked the end of the freedom to work and live between the UK and the European Union. The consultation announced yesterday aims to determine how far the country’s crypto regulations should follow those of other nations. The government is asking Bitcoin Profit stakeholders, „To what extent should the UK’s approach align with those of other jurisdictions?“ In addition, a proposal has been put forward to require UK registration for all companies offering stablecoins:

„Due to the digital, decentralised and cross-border nature of stable tokens, the UK government and authorities are considering whether companies actively offering services to UK-based customers should be required to be based and licensed in the country.“

The consultation itself outlines existing regulations followed by new proposals. The Treasury Department is paying particular attention to stablecoins, which are reportedly lacking a formal legal definition in the UK. One of the central proposals is therefore to establish such a definition.

However, the government is not proposing to link the new definition of stablecoin to the underlying blockchain infrastructure:

„The government and other Cryptoassets Taskforce authorities recognise that although crypto assets are generally supported by DLT, stable tokens could be designed using other technologies. This classification is therefore agnostic as to the technology behind its use (e.g., whether it is DLT-based or not).“

Going forward, the consultation excludes algorithmic stablecoins from the proposed definition, seemingly reserving the category for tokens anchored to a reference asset, be it a fiat currency or gold.

In addition to seeking to establish a basic legal definition for stablecoins, the Treasury Department sets out a variety of potential areas for regulation, including who is authorised to manage stablecoins and how they will maintain and report reserves.

Responses to yesterday’s consultation will be accepted until 21 March

Last year, the Treasury Department published new regulations relating to promotion in the crypto sector in an attempt to counter the wave of illicit or hidden financial interests that characterised the boom in initial coin offerings in 2017 and 2018. For example, DJ Khaled and Floyd Mayweather got into trouble for not disclosing payments they received for promoting Centra Tech’s ICO.

The US is also grappling with the issue of stablecoins. Last month, Rashida Tlaib introduced a bill that would effectively limit the issuance of stablecoins to registered banks. A few days ago, the Office of the Comptroller of the Currency gave the green light to national banks to operate nodes and make payments on stablecoin networks.