The United Kingdom is preparing to introduce new regulatory frameworks for the cryptocurrency industry, including stablecoins, by early 2025. This follows a delay caused by the general elections in July and the election of Keir Starmer as the new Prime Minister.
Key Developments in the UK’s Crypto Regulation
Tulip Siddiq, the Economic Secretary to the UK Treasury, announced that stablecoins will not fall under the existing Payment Services Act but will be included in a new regulatory framework. The move aims to provide clearer oversight for the growing cryptocurrency market in the UK.
The government intends to begin drafting regulations for stablecoins and broader crypto regulations by early 2025, aligning with the UK’s commitment to ensuring financial stability and consumer protection in the rapidly expanding digital asset space.
European Union Leads with MiCA Regulations
While the UK is still in the process of crafting its regulations, other European nations have made strides:
- The EU implemented MiCA (Markets in Crypto-Assets) regulations earlier this year, providing a comprehensive regulatory framework for crypto assets, which offers enhanced consumer protections and aims to ensure financial stability.
- Countries like France, Switzerland, and Liechtenstein have already implemented specific crypto regulations within their borders.
These regulatory moves underscore the growing importance of clear legal frameworks for the digital asset sector across Europe.
Growing Crypto Market in the UK
The UK’s crypto industry is rapidly expanding:
- 2.5 million adults in the UK own cryptocurrencies, representing about 5% of the population.
- The market size has reached approximately $170 billion, with $8.5 billion in trading volume.
- Venture capital funding into crypto and blockchain startups surged to over $1.9 billion in 2022, signaling the industry’s potential.
Bank of England’s CBDC Progress
In parallel with the regulatory efforts, the Bank of England is moving forward with the development of a Central Bank Digital Currency (CBDC), also known as the Digital Pound. Currently in the design phase, this development is being discussed with industry leaders, which could further shape the UK’s future crypto landscape.
The UK is poised to catch up with other regions in regulating the growing cryptocurrency sector. As the industry expands and attracts significant investment, clear, robust regulations will be essential to ensure market stability and protect consumers. With regulations on stablecoins and potential developments in Central Bank Digital Currency, the UK aims to solidify its role in the global crypto market by 2025.
