The UK Government – presumably spurred on by Prime Minister Rishi Sunak – has announced it will be bringing forward new regulations in respect of stablecoins (Britcoin, if you must, and others) but also in respect of staking, exchanges, and custody by the middle of the year.
Of course, there is in fact already a GBP stablecoin, but it is a complete minnow. You can read about it here. Previously called GBPT, and now called 1GBP, it only has a total mark cap of less than £3 million – but this will certainly grow. Every 1GBP is backed by an actual fiat £1 in the bank.
This is a distinct acceleration from the government’s previous position and is to be applauded. Anything that gives clarity in the cryptoverse is warmly welcomed by all but the most hardline devotees.
The regulations were recently announced by Economic Secretary Bim Afolami, during which he confirmed that they were effectively in draft format. Once enacted, these will bring a number of crypto operations (namely exchanges and custodial services) under regulatory oversight for the first time.
Very sensibly, the oversight bodies have been split so that the Bank of England (BoE) will cover stablecoins – after all, they are effectively a monetary instrument – whilst the other matters will be covered by the Financial Conduct Authority (FCA).
In other news, the London Stock Exchange has begun accepting listing applications for Bitcoin and Ethereum exchange-traded notes (ETNs). These are slightly different from ETFs as they are intended for institutional use only.
According to the expected timescales, the first ETNs are due to start trading on May 28. This is lighting speed for adoption, which has gone from a blanket ban at the beginning of the year to full scale adoption in less than five months.
Taken together with ongoing work by the treasury, the BoE, and the FCA, this amounts to a pretty comprehensive leap forward in terms of making the UK a great place to do crypto business.
It also builds on what is happening elsewhere on a regulatory front – particularly the USA. A bill has recently been put forward to the US Senate that will effectively mean stablecoins can only be 100% backed by fiat cash and abide by a series of new rules and regulations to presumably avoid situations like what happened with TerraUSD during 2022.
As people become more comfortable with the regulations that cover various crypto initiatives, surely they will start to dip their toes in the waters of investment? And not just in a get-rich-quick way…
Crypto in all its forms requires a solid body of supporters to keep the flag flying and the markets toddling along. Those supporters need to come from people who are prepared to take higher risks – I would never suggest that crypto investments are not risky – and are prepared to sit out the volatility and fear, uncertainty, and doubt (FUD) that goes with the territory.
So, hats off to the UK for taking a great leap forward. It will be really interesting to see the final regulations as enacted on stablecoins, in particular
Temple Melville is CEO of The Scotcoin Project Community Interest Company (CIC)
