Britain will soon announce crypto regulatory measures, sources say. According to four industry sources with knowledge of the subject. The government of the United Kingdom will unveil measures to control the cryptocurrency market. In the near future, with a special emphasis on a form of token that is fast gaining popularity. Known as stablecoins.
Sources told CNBC that British Finance Minister Rishi Sunak is expected to make an announcement. In the coming weeks about a new regulatory system for cryptocurrencies. The sources asked not to be identified because the information has not yet been made public. But the information has not yet been made public.
When CNBC questioned about the plans. The Treasury Department declined to provide any additional information.
Sources who spoke with CNBC believe that. Despite the fact that the proposals are still in the early phases of development. They will be useful to the industry since they will provide legal clarity. For a sector that has so far been largely unregulated.
According to the sources, Treasury officials have displayed a willingness to learn about. And appreciate the intricacies of the cryptocurrency market and so-called stablecoins. Which are digital assets whose value is derived from current currencies. Such as the US dollar.
Negotiations have taken place between the department and a number of firms. And trade organisations in recent months. According to one of the sources, this included the cryptocurrency exchange Gemini. Which is owned by the Winklevoss brothers. As well as other companies. It is known as the Gemini dollar because it is pegged to the United States dollar. And issued by the cryptocurrency exchange Gemini, which based in New York City.
Usage of Stablecoins has Exploded in Recent Years in Britain
As a percentage of total cryptocurrency usage over the past several years. Stablecoins have undergone exponential growth. Which has coincided with an increasing level of public interest in cryptocurrencies in general. Since its inception two years ago. Tether, the world’s largest stablecoin, has grown to have a total circulating supply. Of more than $80 billion. A huge rise from its prior circulating quantity of roughly $4 billion.
However, regulators are concerned that such tokens may not fully supported. By an equivalent amount of reserves and that they may used for money laundering. And other illicit acts if they not entirely backed by reserves.
Officials from the financial industry. However, are concerned about the likelihood. That the financial system would exposed to bitcoin and other digital currencies. As well as the possibility that they may used to evade sanctions imposed on Russia. Following its invasion of Ukraine.
The Bank of England called on policymakers to broaden regulatory frameworks. In order to mitigate the dangers that cryptocurrency poses to financial stability on Thursday.
Deputy Governor of the Bank of England, Sam Woods, addressed a letter to several bank CEOs. Stating that there has been “increasing interest” from banks. And financial firms in “joining various cryptocurrency markets.”
According to the sources, the Treasury Department’s move interpreted. As a response to President Joe Biden’s executive order. Which called for coordination between multiple government agencies. In the United States regarding cryptocurrency regulation. Several industry insiders have expressed dissatisfaction. With the lack of similar action in the United Kingdom.
A number of companies, including Revolut, Blockchain.com, and Copper. May forced to shut down their cryptocurrency operations in the United Kingdom. This week if they fail to register with the Financial Conduct Authority’s crypto asset register. By the March 31 deadline, according to the Financial Times.
According to the Financial Conduct Authority. A “significant percentage” of cryptocurrency businesses do not adhere to anti-money laundering regulations. The total of only 33 businesses have accepted onto the list. More than 80% of the companies that evaluated. By the authorities have either withdrawn their applications or been denied.