The UK’s Consultation Report
The UK has released a report titled “Regulatory approach to Cryptoassets and Stablecoins, Consultation and Call for Evidence.” The document is an attempt to survey the response of stakeholders on how the government will approach regulations of these digital assets.
Included in the consultation are “Cryptoassets and the current regulatory landscape”, “the Policy approach”, “expanding the regulatory perimeter”, “a call for all evidence on investment and wholesale uses” and “responding to the consultation with a call for evidence”.
The UK’s Changing Landscape
The landscape is changing rapidly. Therefore, so-called Stablecoins – Cryptoassets could pave the way for faster, cheaper payments, making it easier for people to pay for things or store their money.
John Glen, M.P., & Treasury’s Economic Secretary, stated in the reports introduction that “There is also increasing evidence that Distributed Ledger Technology (DLT) could have significant benefits for capital markets, potentially fundamentally changing the way they operate.”
He also stated his concern that “such developments could pose a range of risks to consumers and depending on their uptake, to the stability of the financial system”.
The U.K. is planning “a staged and proportionate approach” to new crypto asset developments, taking a focus in the report on Stablecoins / Cryptocurrencies that generally aim to have a stable value and being backed by assets such as the U.S. dollar.
The UK’s Focus on Protections
The consultation focuses particularly on developing a “sound regulatory environment” for stablecoins, which the U.K. government considers have most “urgent” risks and opportunities.
Since the announcement of the Facebook-backed Libra project (now rebranded as Diem), regulators and governments worldwide have raised concerns over the potential effects of so-called global stablecoins on financial stability and even monetary sovereignty.
The paper marks the second Treasury-led crypto consultation. The first, announced last summer and concluded in October, set out plans to increase oversight into cryptocurrency promotions in order to protect investors.
The results will be published “in due course,” the Treasury said in the new report.
The U.K.’s Financial Conduct Authority has already issued guidance on crypto assets – including “exchange tokens” like Bitcoin, Ether and XRP – setting out which do and don’t fall under its jurisdiction in July 2019.
The FCA recently banned the sale of derivatives and exchange-traded notes, saying it considers the products to be ill-suited for retail consumers due to the potential harm they pose.
Responses to the consultation paper are being accepted until March 21.
