Her Majesty’s Treasury demands and requires input from the crypto industry on future regulations.
In a January 7 announcement open consultation, the UK’s financial policy department is asking the crypto community to respond to a series of proposals: “The government is inviting views from a wide range of stakeholders, and in particular companies engaged in cryptoasset activities.”
While Brexit formally took effect early last year, New Year’s Eve marked the end of the freedom to work and live between the UK and the EU. The question remains in today’s consultation to what extent the nation’s crypto rules should follow those of other countries. The consultation asks stakeholders, “What is your view on the extent to which the UK approach should be consistent with that in other jurisdictions?” Furthermore, there is a proposal to require registration in the UK for all companies that market stablecoins to people in the UK:
“Due to the digital, decentralized and cross-border nature of stable tokens, the government and UK authorities are considering whether companies actively targeting UK consumers should have a UK establishment and be licensed in the UK.”
The consultation itself explains existing regulations, followed by new proposals. The Treasury pays particular attention to stablecoins, which are said to have no formal legal definition in the UK at present. One of the central proposals is therefore to make such a definition.
However, the Treasury does not propose linking the new definition of stablecoin to the underlying blockchain infrastructure:
The government and other Cryptoassets Task Force authorities recognize that while cryptoassets are typically supported by DLT, stable tokens can be designed using other types of technology. This classification is therefore agnostic towards the technology underlying their use (eg whether it depends on DLT or not). “
Elsewhere, the consultation excludes algorithmic stablecoins from its definition as stablecoin, seemingly reserving the category for tokens associated with a reference asset, be it fiat or gold.
In addition to looking for a basic legal definition for stablecoins, the Treasury establishes a range of possible areas to regulate, including who can operate stablecoins and how to hold and report reserves.
Responses to today’s consultation are scheduled for March 21.
Last year the Treasury published new rules for crypto promotion, an effort to combat the eruption of illicit or undisclosed financial interests that saw the first coin boom in 2017 and 2018. For example, not disclosing payments from Centra Tech for promoting the company’s ICO was how DJ Khaled and Floyd Mayweather ran into problems.
Across the pond, the United States is also grappling with the issue of stablecoin authorization. Last month, Rashida Tlaib introduced a bill that would effectively limit stablecoin issuance to registered banks. This week the Office of the Comptroller of the Mint gave the green light for national banks to run nodes and make payments on stablecoin networks.