The UK Government announced, on 4th April 2022, moves that will see stablecoins recognised as a payment form. This will be a key element of wider plans to make Britain a global cryptoasset technology and investment hub. Much like the US Treasury, the UK Treasury is investigating Stablecoins in order to bring them within regulation. Legislation will enable recognition as a form of payment.
Measures include legislating for a ‘financial market infrastructure sandbox’ to enable innovation, with a Financial Conduct Authority led ‘CryptoSprint’, working with the Royal Mint to provide a Non Fungible Token. This will be accompanied by the formation of a Cryptoasset Engagement Group to liase between Government and Business.
Chancellor Rishi Sunak announced:
"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. 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. This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation."
It is unclear which currency the Stablecoins will be pegged to.
The UK Government intends exploring means of enhancing tax system competitiveness to encourage the cryptoasset market in the UK to develop. In particular how Dentralised Finance loans are treated for tax purposes. This will build on work already carried out for Funding Circle, the Crowdfunding Finance Business, to encompass how holders of cryptoassets lend them out for a return. The Government will also consult on extending the Investment Manager Exemption to include cryptoassets.