Earlier this year the Treasury announced that it plans to validate stablecoins as a recognised form of payment. This will be part of a wider government initiative to 'make Britain a global hub for cryptoasset technology and investment'.
Stablecoins are digital units of value that rely on stabilisation tools to maintain a stable value over time. The value of a stablecoin is typically aligned to a specific real currency.
The government plans 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.
The initiative forms part of a package to ensure that the UK financial services sections remains at the cutting edge of technology, gives consumers freedom of choice, and attracts investment. The package includes:
introducing a ‘financial market infrastructure sandbox’ to enable firms to experiment and innovate,
establishing a Cryptoasset Engagement Group to work more closely with the industry,
exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market,
and working with the Royal Mint on a Non-Fungible Token (NFT) this summer as an emblem of the forward-looking approach the UK is determined to take
Commenting on the issue, Chancellor Rishi Sunak said:
This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.
'It's my ambition to make the UK a global hub for cryptoasset technology, and the measures we've outlined . . . will help to ensure firms can invest, innovate and scale up in this country.
'We want to see the 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.'