The UK is making plans to become a globally recognised hub for cryptocurrency.
Financial Services Minister John Glen told UK Fintech Week in London that Britain will look to exploit the potential of cryptoassets and the underlying blockchain technology.
With the goal of helping consumers to make payments more efficiently, he said the government will look to bring some stablecoins – tokens which are tied to the value of real-world assets – into the Bank of England’s regulatory framework.
Examples of popular stablecoins include Tether and Binance USD.
“The approach will ensure convertibility into fiat currency, at par and on demand,” the finance ministry stated.
Glen said that later this year Britain will consult on creating regulations for other cryptocurrencies such as Bitcoin.
“If crypto technologies are going to be a big part of the future, then we in the UK want to be in – and in on the ground floor,” he said.
“We see enormous potential in crypto and we want to give ourselves every chance to take maximum advantage.
“We shouldn’t be thinking of regulation as a static, rigid thing. Instead, we should be thinking in terms of regulatory ‘code’ – like computer code – which we refine and rewrite when we need to.”
A regulatory ‘sandbox’ – similar to that currently running around open finance – will be launched by the Bank of England and FCA next year to allow companies to test the use of blockchain in real-world scenarios without consequence.
The Law Commission will also consider the legal status of decentralised autonomous organisations while the UK will look to make the tax system for crypto more competitive.
“On balance, we don’t think the tax code will need major surgery to make it work more easily for crypto,” Glen said.
Chancellor Rishi Sunak has also asked the Royal Mint to create a non-fungible token by the summer.
NFTs are digital assets that represent ownership of a virtual item via the blockchain.
“It is my ambition to make the UK a global hub for crypto asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” Sunak said.
“We want to see the [cryptocurrency] businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.
“This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”
However Andrew Bailey, governor of the Bank of England, called crypto the “new front line for scammers”.