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Legislation efforts concerning stablecoins are ongoing worldwide. Countries are trying to determine which regulations to implement. In this context, the UK, known for its pioneering legal moves in the cryptocurrency space, has taken a new step towards the stablecoin sector. Accordingly, it is targeted to enact legislation related to stablecoins within the next six months.
UK Aims to Enact Stablecoin Legislation
The UK’s Treasury Economic Secretary Bim Afolami stated that the UK government is working hard to legislate new regulations related to stablecoins and crypto staking services within the next six months.
Afolami declared the government’s intention to “resolve the legal regulations related to stablecoins as soon as possible” within the next six months. Although the UK has not yet set a date for the next general election, it is legally required to take place by January 2025.
Afolami’s comment came after the Treasury’s decision last August to accept a regulation stating that the Bank of England and the Financial Conduct Authority would systematically regulate stablecoins together.
Strict Rules in the Cryptocurrency Space
In October 2023, the UK government released proposals outlining its intention to bring the cryptocurrency sector under financial regulations, requiring firms to obtain authorization from the FCA to conduct crypto-related activities.
Following this announcement, several cryptocurrency firms, including Revolut and Bitfinex, decided to suspend their services in the UK. To comply with FCA rules, Coinbase began requesting risk acceptance forms from its UK users starting last month.
Oliver Linch, the lawyer and CEO of the cryptocurrency exchange Bittrex Global, stated last month that “There are quite strict marketing rules for some crypto players by the FCA. They are also extremely deterrent. This situation is emerging as a reason for players in the cryptocurrency space to leave the UK.” Bittrex Global announced its liquidation in November due to regulatory issues and shrinking market share.
Legal developments concerning stablecoins could potentially affect major players in the field, such as Tether and Circle. Particularly, the possibility of an impending ban could lead to a bombshell development in the cryptocurrency market.
