Cryptoassets are “here to stay”, the Economic Secretary to the Treasury Tulip Siddiq has said in a speech outlining the government’s approach to regulating the industry.
Speaking at the Tokenisation Summit hosted by City and Financial Global, Siddiq assured the crowd that while regulatory developments in the UK for the crypto sector have “seemed quiet”, the work from the Treasury has “not stopped over recent months”.
The City minister announced plans for a draft regulatory framework for the crypto industry by early next year, as the value of currencies like Bitcoin continue to soar.
The announcement follows the publication of proposals for the financial services regulation of cryptoassets in the UK by the previous government in October of last year.
According to Siddiq, the current government will largely stick with its predecessor’s proposals, which included the creation of new regulated activities for cryptoassets, such as the operation of a cryptoasset trading platform and associated regimes for admissions to trading and market abuse.
“I can confirm that those proposals still stand, and that the government intends to implement them in full,” Siddiq said.
The minister also said the government will proceed with new regulated activities for stablecoins, to be implemented “to the same timetable as the rest of the regulatory regime for cryptoassets”.
The previous administration had proposed details for the treatment of fiat-referenced stablecoins – cryptocurrencies tied to the value of traditional assets – as a distinct class.
These proposals included “making changes to UK payments regulations to ensure consumers had adequate protections when using stablecoins for retail payments”.
Siddiq has, however, said the government “does not intend to bring stablecoin into UK payments regulation at this time.
“Such an approach would place additional regulatory burdens on certain stablecoin activities in a way that would not be proportionate based on the current use cases.”
The Financial Conduct Authority (FCA) has in the past warned extensively of the dangers of cryptoassets, having issued the warning to consumers that those investing should be “prepared to lose all their money”.
The FCA’s concerns regarding the crypto sector led to a feud with the world’s largest crypto exchange, Binance, which halted UK customer onboarding last year following a regulatory crackdown as part of the FCA’s financial promotions rules.
Binance had previously been banned from the UK entirely in 2021, and though it returned due to a partnership with the FCA-regulated group Paysafe, the watchdog was less than satisfied.
“Our concerns about Binance remain. We received a notification of this business partnership but have limited powers to object to arrangements of this kind,” said a spokesperson for FCA at the time.
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