UK: Government Announces Plan to Become a Global Hub for Crypto Asset Technology

The package of measures announced by the UK government aims to ensure that the financial services sector remains at the cutting edge of technology, attracting investment and jobs and widening consumer choice. Measures include:

• Introduce a financial market infrastructure sandbox or controlled environment that will allow companies to experiment and innovate in delivering the infrastructure services that underpin markets, by allowing Distributed Ledger technology to be trialled.
• Establish a crypto asset engagement group to work more closely with the industry, the economic secretary will chair it and convene key figures from industry and regulatory authorities to advise the government on issues facing the crypto asset sector.
• Explore ways to improve the competitiveness of the UK tax system to encourage further development of the crypto asset market,
• Working with the Royal Mint on a non-fungible token (NFT) this summer, as an emblem of the progressive approach the UK is determined to take.
• The UK government will explore ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the UK. It will review how DeFi loans – where holders of cryptoassets lend them out for a return – are treated for tax purposes. The government will also consult on extending the scope of the Investment Manager Exemption to include cryptoassets.
• The Financial Conduct Authority, the UK's financial authority, will hold a two-day "CryptoSprint" in May with industry participants, seeking input directly from the industry on key issues related to the development of a future crypto asset regime.

Referring to the announced measures and their purpose, Chancellor of the Exchequer Rishi Sunak said: “It's my ambition to make the UK a global hub for cryptoasset technology, and the measures we've outlined today will help to ensure firms can invest, innovate and scale up in this country”.

He further explains that by regulating effectively they can build trust in companies to "think and invest long-term."

We must mention that in an official statement the United Kingdom Government explains that Stablecoins are a form of cryptoasset that are typically pegged to a fiat currency such as the dollar and are intended to maintain a stable value. With appropriate regulation, they could provide a more efficient means of payment and widen consumer choice.

For this reason, the government intends to legislate to bring stablecoins – where used as a means of payment – within the payments regulatory perimeter, creating conditions for stablecoins issuers and service providers to operate and invest in the UK.

They also claim that by recognizing the potential of this technology and regulating it now, the government can ensure financial stability and high regulatory standards so that these new technologies can ultimately be used both reliably and safely.

Economic Secretary to the Treasury, John Glen at the Innovate Finance Global Summit, announced that the UK will proactively explore the potentially transformative benefits of Distributed Ledger Technology (DLT) in UK financial markets, which enables data to be synchronized and shared in a decentralized way to potentially achieve greater efficiency, transparency and resilience.