UK government supports stablecoins, gears up to become Europe’s crypto hub

• UK’s Economic Secretary to the Treasury stated that the government is fully supportive of a stablecoin for wholesale bank settlements. 
• Experts believe that the road to crypto regulation in the UK would be patchy in 2023 as the country prepares to accelerate its departure from EU payments. 
• The UK Parliamentary Treasury Committee is supportive of stablecoins issued by third-party providers rather than the government.

The UK government's crypto regulation could be 2023 according to experts. As the country speeds up its departure from European Union (EU) payments and crypto regulations, the government accepts stablecoin adoption for bank settlements. 

Also read: Stablecoin USDC battles rival Tether for dominance after delisting in Canada

UK government’s progress towards becoming Europe’s crypto hub

In April 2022, the Prime Minister of the United Kingdom, Rishi Sunak, first stated the country’s intention to turn the UK into a hub for crypto asset technology and investment. There has been little progress towards this goal over the past eight months and the last few months of 2022 brought about a gradual shift in the government’s stance on stablecoins and cryptocurrency regulation. 

The Financial Services and Markets Bill (FSM Bill) that allows for the licensing of new payment apps and their integration into the financial markets infrastructure sandbox, received several digital asset-related amendments in October 2022. With the passage of this bill, the Financial Conduct Authority would regulate stablecoins and other types of digital assets.

The Edinburgh Reforms in December 2022 reaffirmed the government’s interest in listing specific digital asset work streams as part of its financial services reform plans. 

Andrew Griffith, UK’s Economic Secretary to the Treasury recently spoke before a hearing of the UK Parliamentary Treasury Committee about payments technology and CBDC. Griffith stated that the UK government is fully supportive of a stablecoin for wholesale bank settlements. The stablecoin would be issued by a third-party provider, rather than the UK government.

Despite the acceptance of stablecoins, the road to regulation of cryptocurrencies in the UK could be patchy in 2023.

Griffith commented on the release of a consultative paper on Central Bank Digital Currencies (CBDC) and said crypto market participants can expect a release “in weeks, not months.”