The Britain government has unveiled plans to control some digital currencies as a part of larger plans to transform into a global hub for virtual payments. Let us have a look at the latest UK crypto rules. So here is some UK cryptocurrency news that you should not miss.
How Did The UK Crypto Rules Come Into Act?
Digital currencies have exploded in fame, leaving global officials scrambling to figure out how to control them in the middle of fears that they could threaten the financial stability of a nation and also hurt the consumers. John Glen, economic secretary to the Treasury, said in a statement,
“The U.K. is open for business – open for crypto businesses.”
He further added that,
Treasury chief Rishi Sunak also has asked the Royal Mint to create a digital collectible known as an NFT as an “emblem of the forward-looking approach the U.K. is determined to take.”
As per the crypto proponents, such technology will allow easier, faster, and more transparent payments, while skeptics are concerned that it could be used for illegal usages such as money laundering and also contribute to carbon emission because of the heavy computing power required to process the transaction. Now you may wonder, is cryptocurrency legal in UK? Yes, it is absolutely legal but there were no regulations on crypto in the United Kingdom as of now. But the new set of UK crypto rules will surely bring changes in this sector.
Last month, the U.S stepped up government views of crypto while the EU (European Union) lawmakers approved draft rules for digital assets. Glen stated that the government aims to update laws on payments to insert a type of digital currency called stablecoins to encourage service providers and issuers to function and evolve in the United Kingdom. Stablecoins are generally backed up by the dollar or a commodity like gold, making them a lot less fluctuating in comparison to normal digital currencies such as Bitcoin, which can swing wildly in price. He said,
“This will also enable consumers to use stablecoin payment services with confidence.”
There are over 200 stablecoins, and two of the largest are USD Coin and Tether. Stablecoins are often employed to pay fees on UK cryptocurrency exchanges or send payments across borders.
Sunak has commissioned the Royal Mint to formulate an NFT (non-fungible token), by the summer. NFTs use a form of encryption technology that is known as the blockchain to form one-of-a-kind digital items such as sports memorabilia or artwork, which are at times sold for millions of dollars. The UK crypto rules also include plans to explore the notion of using crypto technology to issue U.K. government debt. Glen stated,
“The government is now looking at regulating a broader set of crypto activities including trading of tokens like bitcoin.”
UK Crypto Rules: Minting Their Own NFT
As stated before, NFTs are virtual assets that portray ownership of a digital item such as an artwork or video game avatar that uses blockchain. Blockchain is the technology that underpins digital currencies. They have received a lot of popularity over the last few years because there are now various brands on NFTs and many celebrities have also started to adopt this.
The NFT initiative by the UK included in the UK crypto rules is a part of a wider effort by the British government to “lead the way” in the crypto space. The minister declared a number of UK crypto rules to bring digital currencies under more regulatory scrutiny that include:
- Bring stablecoins which will be the UK government cryptocurrency. within the prevailing regulations of the U.K on electronic payments.
- Consult on a “world-leading regime” for regulating trade in other digital currencies, that include Bitcoin.
- Ask the Law Commission to approve the legal status of blockchain-based sectors known as DAOs (decentralized autonomous organizations)
- Evaluate the tax treatment of DeFi (decentralized finance) loans and “staking,” which offers crypto users the potential to earn interest on their savings.
- Create a Cryptoasset Engagement Group that will be conducted by ministers and host members from U.K. regulators and also crypto businesses.
- Explore the usage of blockchain technology in issuing debt vehicles.
Glen in a statement said,
“We shouldn’t be thinking of regulation as a static, rigid thing. Instead, we should be thinking in terms of regulatory ‘code’ — like computer code — which we refine and rewrite when we need to.”
Glen stated that the government was also “widening” its gaze to look at other dimensions of crypto, that included the so-called Web3, a shift that aims for a more decentralized variant of the internet constructed on the blockchain technology. He said,
“No one knows for sure yet how Web3 is going to look. But there’s every chance that blockchain is going to be integral to its development. We want this country to be there leading from the front, seeking out the greatest economic opportunities.”
UK Crypto Rules Gives Mixed Signals
Industry experts have been calling for clarity about the UK crypto rules and the position of the U.K on crypto as policy makers throughout the globe start taking a closer look at the $2 trillion markets.
In the previous month, U.S. President Joe Biden signed an executive order urging government coordination when it is about regulating crypto. The shift was seen as broadly positive for the sector. In the meantime, the lawmakers of the European Union recently voted against rules that would have put the future of crypto mining at risk. However, they also passed some fresh rules cracking down on anonymous crypto transfers. Back in the UK crypto rules, British regulators have taken a harsh tone on virtual assets.
The Financial Conduct Authority has avoided a vast majority of crypto firms applying to get registered with the watchdog, warning it is concerned that too many “financial crime red flags” are going unnoticed.
Last week, the FCA crypto regulation widened an important deadline for crypto businesses on a temporary register, which includes Copper and Revolut in order to receive complete authorization. Philip Hammond, the former U.K. finance minister, functions as an advisor to Copper.
Several businesses have been forced to wind down their U.K. crypto functions and shift offshore after failing to make it onto the final register, including Blockchain.com, B2C2, and Wirex.
Britain gave out a detailed plan of UK crypto rules on Monday to exploit the ability of digital assets and their underlying blockchain technology to support consumers make payments more easily. As part of formulating a global digital asset hub, financial services minister John Glen stated that Britain will legislate to bring some stablecoins under the regulatory net like complying with prevailing payment rules. But there is no intimation about the UK crypto tax as of now.