- The UK government is intensifying efforts to enact new regulations for stablecoins and staking services
- Economic Secretary to the Treasury Bim Afolami recently expressed a determination to implement legislation within the next six months
- Under the new laws, staking is expected to receive a new classification
The UK government is intensifying efforts to enact new regulations governing stablecoins and staking services for cryptocurrencies within the next six months, amidst mounting pressure to deliver specific proposals before a general election. Speaking at an industry event hosted by Coinbase in London on Monday, Economic Secretary to the Treasury Bim Afolami emphasized the government’s determination to get the legislation in place “as soon as possible” following the passage of the Financial Services and Markets Act last summer. A general election is expected in the UK later this year, with the consensus being that Afolami’s ruling Conservative Party could be ousted.
Legislation Within Six Months
The UK has been making great strides in regulating many aspects of the crypto space as part of a push to turn the country into a crypto development hub, including several pieces of legislation aimed at ensuring that crypto is no longer a ‘Wild West’ in the country.
Afolami was quoted at the event saying, “We’re very clear that we want to get these things (stablecoin and staking legislation) done as soon as possible. And I think over the next six months, those things are doable.”
The Treasury’s commitment to provide clarity on crypto matters by 2024 follows earlier consultations on fiat-backed stablecoins and the passage of the Financial Services and Markets Act last summer. Market observers anticipate that fiat-backed stablecoins and their issuers will be regulated under existing payments laws, enabling the UK’s financial regulator to dictate acceptable asset types.
UK Crypto Firms Holding Back
Tom Duff Gordon, Vice President for International Policy at Coinbase, highlighted expectations that staking will receive a new classification, ensuring it avoids being categorized as a collective investment. The UK’s tax authority, HMRC, currently treats income from staking as either trading income or miscellaneous income, but this may get a more specific definition after the legislation is introduced.
Broader proposals to subject crypto exchanges and industry providers to existing financial services rules remain uncertain, however, with Afolami admitting to the challenge of providing a timeline, stating, “There’s just a huge amount going on, so I don’t want to commit to that now.”
Despite Prime Minister Rishi Sunak’s 2022 pledge to establish the UK as a global crypto hub, regulatory progress has been stymied somewhat by unclear rules leading to crypto companies holding back from launching new products. Afolami conceded that uncertainty regarding timelines for broader crypto regulation indeed exists, reflecting the complexities and ongoing developments in the sector.
