Emily Walker
As reported by Bloomberg, the Labour government, led by Keir Starmer, is gearing up to introduce extensive regulations for cryptocurrencies in early 2025. This announcement is anticipated at the City & Financial Global Tokenisation Summit in London.
UK Set for Crypto Regulation Changes
A high-ranking official has indicated that the UK government is drafting a regulatory framework for digital assets, aiming to align with European and US developments in this space in early next year.
During a conference on November 21, Economic Secretary to the Treasury, Tulip Siddiq, highlighted the government’s priority on establishing regulations for stablecoins and crypto staking services.
For those new to this topic, stablecoins are digital currencies that are usually tied to the value of traditional currencies such as the US dollar or the Euro. Conversely, crypto staking services enable users to “stake” their digital assets on blockchain networks, potentially earning rewards in the form of digital tokens.
The former Conservative administration, under Rishi Sunak, had intended to implement cryptocurrency rules earlier in the year. However, these plans were postponed due to the general election and a change in government leadership.
These forthcoming regulations are expected to significantly alter how stablecoins and crypto staking services are treated. Siddiq pointed out that stablecoins will be excluded from the current UK payment services regulations, reflecting their distinct usage as compared to traditional payment methods.
Industry leaders in the UK have been pushing for crypto staking services to be recognized as technology services instead of investment schemes. Such a classification would subject staking to less restrictive regulations, which many in the industry find overly burdensome. The Labour government seems willing to accommodate these views, with Siddiq expressing:
It doesn’t make sense for staking services to have this treatment, and the government intends to proceed with removing this legal uncertainty accordingly.
Trump’s Election May Boost UK’s Regulatory Initiative
The election of pro-crypto Republican presidential candidate Donald Trump might have sped up the UK’s efforts to roll out regulations for digital assets. A favorable regulatory landscape in the US could lead crypto businesses to leave the UK, an outcome the struggling British economy wants to avoid.
Establishing a favorable regulatory climate for digital assets will be particularly challenging for the UK government, given its previous unfavorable stance towards cryptocurrencies.
While the UK formulates its digital asset regulations, countries like El Salvador and Bhutan are currently benefiting from their proactive, supportive approaches toward cryptocurrency. As of now, Bitcoin (BTC) is trading at $98,286, reflecting a 2% rise in the last 24 hours.