UK government releases final recommendations for cryptocurrencies and stablecoins, backed by a series of regulatory plans.
It should be remembered that the United Kingdom will begin regulation of stablecoins backed by fiat currencies, with plans for it to come into effect in early 2024.
Supervision of these activities will fall to the Financial Conduct Authority (FCA), establishing a solid legal framework to protect the rights of users and investors.
This news comes after the closure of a cryptocurrency consultation in April, during which Chancellor of the Exchequer Andrew Griffith reaffirmed the country’s ambition to become a cryptocurrency epicenter, even after the collapse of the FTX exchange, which shook the market .
Additionally, in June, the UK Parliament passed the Financial Services and Markets Act 2023, which now considers the cryptocurrency market a regulated space.
The Bank of England also launched a consultation on a framework for algorithmic stablecoins, reflecting the government’s ongoing dedication to this area.
UK government regulations
Firstly, they provide strong legal protection, ensuring that all cryptocurrency transactions are carried out within a legal framework.
These regulations also establish requirements and controls that prevent fraud and malicious activities, helping to make the market safer and more transparent. In addition, they seek to maintain market stability, avoiding volatility and excessive speculation.
But, one of the most notable benefits of these regulations is their ability to attract institutional investors and companies to the cryptocurrency market. This promotes the growth and maturity of the sector, while encouraging international cooperation and harmonization regarding cryptocurrency regulation.
But not forgetting…
However, note that while regulations are essential, they must be balanced and well-conceived. Overly restrictive regulations could hinder technological innovation in cryptocurrencies.
The UK’s orientation towards finding a balance between user safety and stimulating growth in the sector appears to be in line with this objective.