The UK Treasury has launched a consultation on cryptocurrency and stablecoin regulation. The Ministry of Finance proposes to regulate the industry by analogy with traditional payment services.
The rise of cryptocurrencies and stablecoins could pose the same risks to consumers and financial stability as traditional regulated payment systems, so industry regulation is needed, according to a UK Treasury statement.
“We will take a flexible, risk-based regulatory approach based on the principle of ‘like risks, like regulation’,” said UK MP John Glen.
The government wants to ensure a level playing field for cryptocurrency and traditional markets and reduce opportunities for regulatory arbitrage. According to the document, the regulatory approach will focus on the “most urgent or acute” risks and opportunities, and will take into account the tone of the international discussion, as cryptocurrencies and stablecoins are cross-border in nature.
“The government is considering an approach where the use of currently unregulated cryptoassets and related activities, mainly used for speculative investment purposes, may initially remain outside the perimeter for oversight and prudential purposes,” says the UK Treasury.
“At the same time, they will be subject to stricter regulation in relation to communication with consumers through the financial promotions regime (if adopted) and AML / CTF regulation. Instrumental tokens that are used to access services will also remain outside the regulatory perimeter. ”
With regard to stablecoins, the Ministry has proposed to first introduce a regulatory regime for “stable tokens” used as a means of payment.
“This regulation will cover firms that issue stablecoins and firms that provide related services to consumers, directly or indirectly,” the document says.
Algorithmic stablecoins remain outside the scope of the proposed rules as they may not be suitable for retail or wholesale transactions. For similar reasons, stock tokens are also excluded from regulation. Through appropriate regulation of cryptocurrencies, the UK seeks to maintain its position as a “global leader in financial technology,” Glen said.
If regulation is enacted, UK cryptocurrency exchanges that will directly list stablecoins may need to register with the UK Financial Conduct Authority (FCA).
The consultations are open until March 21, and the Ministry is encouraging stakeholders, especially cryptocurrency startups, to share their views on the proposed regulatory approach.
Recall that a ban on the sale of cryptocurrency derivatives to retail investors came into force in the UK this week.
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