Comprehensive regulation is coming! The UK's encryption regulatory framework will be launched next year, including stablecoins, stake?

The UK Treasury announced a comprehensive regulatory plan

According to Bloomberg, Tulip Siddiq, Economic Secretary to the Treasury of the United Kingdom, announced at the City & Financial Global Tokenization Summit held in London on November 21 that the UK will introduce a draft framework for regulating encryption assets in early next year. This regulatory framework will take a comprehensive approach, covering multiple important industries such as Cryptocurrency, Stablecoin, and stake services. Siddiq emphasized at the meeting: 'Having all the regulations in place at once is not only simpler, but also more reasonable.' This decision shows that the UK government is taking a more proactive and systematic approach to regulating encryption assets.

Image Source: City & Financial Global UK Treasury Economic Secretary Tulip Siddiq announced at the 'City & Financial Global tokenization Summit' that the UK will introduce a draft encryption asset regulatory framework in early next year.

Some of the originally planned regulatory requirements were expected to be announced several months ago, but these plans were put on hold as the Conservative government led by Prime Minister Rishi Sunak stepped down. The new government, led by Labour leader Keir Starmer, who took office on July 5th, will be responsible for proposing and implementing these new regulatory standards. This policy change not only demonstrates the new government's emphasis on regulating encryption assets, but also reflects the UK's determination to maintain its competitive edge in the global fintech development wave.

Regulatory focus on stablecoin and stake services

In this regulatory framework, Stable Coin and stake services have become the most followed focus. According to Siddiq's detailed explanation, due to the significant differences between the usage scenarios of Stable Coin and the existing payment service regulations, it is necessary to establish a dedicated regulatory framework for regulation. This Stable Coin legislative plan Traceability a series of discussion documents released until October 2023, which was originally expected to be implemented no earlier than 2025, but is now included in this comprehensive regulatory framework.

Another issue that the industry is closely following is the legal positioning of the stake service. In this regard, Siddiq clearly stated: 'Classifying stake services as 'collective investment schemes' is not reasonable, and the government will strive to eliminate legal uncertainty in this area.' This statement is clearly a response to the concerns of the encryption industry, because if stake services are classified as collective investment schemes, it will bring additional regulatory restrictions, which may affect the development of the industry. The new regulatory framework will provide clearer legal status for these services, which will help the healthy development of the industry.

The UK is facing global encryption regulatory competition pressure.

Despite the former conservative government's repeated expressions of ambition to make the UK a global center for Crypto Assets, the regulatory environment in the UK has been seen as challenging by the industry. This view is often attributed to the strict stance of the independent regulatory body, the Financial Conduct Authority (FCA). In contrast, the European Union's Markets in Crypto-Assets Regulation (MiCA) is set to come into full effect by the end of the year, providing clear regulatory certainty for the entire European continent. Meanwhile, the incoming US government is widely seen as taking a pro-Cryptocurrency stance, further testing the attractiveness of the UK in this multi-billion dollar encryption industry.

It is worth noting that, although the previous government promised to introduce new encryption regulations in July, it ultimately did not materialize. The only specific action taken by the current Labour government in encryption regulation is the proposal of a bill in September to clearly define non-fungible tokens (NFTs), Cryptocurrency, and carbon credits as property to clarify their legal status. While this bill marks an important step, it still appears relatively preliminary compared to comprehensive regulatory frameworks in other major markets.

With the continuous development of the global encryption asset market, the level of regulatory framework has become an important indicator of the competitiveness of various countries. The comprehensive regulatory framework introduced by the UK this time will not only provide market participants with clearer rules of the game, but also demonstrate the UK's determination to reposition its global financial center status in the post-Brexit era. However, whether this new regulatory framework can revitalize the UK's competitiveness in the global encryption asset industry still awaits the actual market response to verify.

"Comprehensive regulation is coming! The UK's encryption regulatory framework will be introduced next year, including stablecoins, stake?" This article was first published in "Encryption City"