The United Kingdom is set to introduce new laws for the regulation of stablecoins and crypto asset management by the middle of 2024, as stated by Economic Secretary Bim Afolami. The announcement was made at the Innovate Finance Global Summit as the government aims to position the UK as a major hub for crypto asset operations.
Last year, a significant financial markets legislation was passed by the UK, which set the stage for cryptocurrencies and stablecoins to become regulated financial activities. The new law would cover a range of crypto functions, such as operating an exchange or managing customer assets.
The regulation and oversight of this sector will be in the hands of the Financial Conduct Authority and the Bank of England. These bodies began discussions on the proposed legal framework for stablecoins in early 2023. It was agreed that the Bank of England would supervise stablecoin providers that have a significant impact on the financial system, whilst the Financial Conduct Authority will regulate the broader crypto industry.
In February, Afolami hinted at additional stablecoin legislation and mentioned that the government was eager to have it implemented within half a year. The importance of crypto regulation has been stressed by the current Conservative party government, which has been further exploring ways to regulate crypto. However, with a potential imminent election that could see the Conservative party removed from power, there is uncertainty around the future of these crypto regulatory plans. The favourite to win the election is currently the Labour party.