The UK government plans to introduce a new framework for cryptocurrency regulation in early 2025, which will cover stablecoins and clarify the legal status of staking services. The Treasury has decided that stablecoins will not fall under UK payment regulations, focusing instead on promoting innovation and overseeing risks through the Financial Conduct Authority. This regulation aims to balance consumer protection with flexibility for growth in the digital asset sector. Additionally, the framework will include initiatives like the Digital Securities Sandbox and a pilot for digital government bonds. The government seeks to integrate traditional finance and cryptocurrency, acknowledging that they should work together rather than in isolation. Industry stakeholders will have opportunities to engage with the framework’s development in 2024.
UK Crypto Regulation Set for 2025: Key Changes Ahead
The UK government is gearing up to introduce a new cryptocurrency regulation framework, with plans to implement it in early 2025. This significant development was announced by Economic Secretary to the Treasury, Tulip Siddiq, during the Tokenisation Summit in London on November 21. The new framework will include regulations for stablecoins and address the legal status of staking services, aiming to create a clearer environment for digital currencies in the UK.
In a move to foster innovation, the Treasury has confirmed that stablecoins will not be classified under UK payments regulation for now. Instead, the Financial Conduct Authority (FCA) will oversee stablecoin issuance, focusing on the associated risks with the backing assets rather than imposing heavy regulations.
Another highlight of the upcoming framework is its response to industry concerns about cryptocurrency staking services. The government plans to clarify whether these services fall under the Collective Investment Scheme rules, which should ease legal uncertainties and protect consumers.
The UK’s approach is in line with recommendations from global organizations, showing its commitment to coordinated regulation. With the goal of integrating traditional finance with cryptocurrency, Sidney discussed the potential of securities tokenization to streamline transactions, blending payment and ownership transfer.
This new regulatory framework adds to existing initiatives, such as the Digital Securities Sandbox and the upcoming Digital Gilt Instrument pilot. Firms in the cryptocurrency sector need to prepare for these changes as they may have to comply with the framework by early 2025, while existing rules will still apply during the transition.
As the UK positions itself alongside other major jurisdictions like the EU and the US, stakeholders in the crypto industry will have a chance to engage with draft provisions in 2024, helping shape the future of digital asset regulation in the UK.
Tags: UK Cryptocurrency Regulation, Stablecoins, Crypto Staking Services, Financial Conduct Authority, Digital Assets Framework, Tulip Siddiq, Tokenisation Summit.
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