The British government will soon announce extensive plans for regulating the crypto industry. According to CNBC, stablecoins
will be the main subject. Rishi Sunak, the English Minister of Finance, is going to reveal the new frame of regulation within a couple of weeks.
British crypto regulation
According to CNBC, things are looking fairly positive for the crypto industry. There will be no ban or other extreme measures. Instead, regulation will create much-needed legal clarity. For now, uncertainty remains high among English crypto investors, as it is not clear what exactly the crypto industry's position is within English law.
British officials are aware of the complexity of cryptocurrencies and stablecoins, so they would be willing to listen to experts within the industry. In fact, there have already been many recent consultations between the Ministry and some leading crypto companies.
UK worries about stablecoins
Stablecoins are the greatest topic of worry, according to CNBC. Stablecoins are cryptocurrencies that are pegged to a certain underlying asset, like US dollars, or gold. Tether (USDT) is an example of a stablecoin backed by US dollars, and PAX Gold (PAXG) is a stablecoin backed by gold. Stablecoins have grown enormously in the past few years, and this growth raises concerns with regulators.
In the top 12 cryptocurrencies alone, there are 4 stablecoins of which the total value makes up to €150 billion. This has raised serious concerns with regulators because some of them fear that the stablecoins aren‘t fully backed by reserves of an equal value. Also, the argument of money laundering and other illegal activities, which has been used against most cryptocurrencies, is also used against stablecoins.
Not only the UK wants to keep a close eye on stablecoins. There‘s already been a lot of fuss regarding stablecoins in the US in the past few months. The president of the SEC even called stablecoins “poker chips”.
Although it‘s true that stablecoins can form a systemic risk if not regulated, even the Bank of America admits that they could become a viable payments method. When it comes to money laundering and illegal activities, the arguments seem to be weak. Stablecoins operate on blockchains, and blockchains are publically available distributed ledgers, which means everyone can see every transaction made on a blockchain
. This in turn only makes it easier to track illegal activities.
England taking steps to regulate crypto - and not just outright ban it - appears to be yet another step in the right direction for the industry. Although some of the early adopters of cryptocurrencies are against regulation and more for a liberalistic approach, regulation does seem to be the way to mass adoption.