The UK government has moved closer to bringing crypto money into the mainstream as it unveiled plans that would allow so-called stablecoins to be used as payment in the UK.
Stablecoins, a form of crypto that is pegged to normal currencies, will be regulated in the same way as normal money when they are used for payments, the Treasury said on Monday.
Unlike highly volatile cryptocurrencies such as Bitcoin, which can lose big chunks of their value within minutes, stablecoins only move in value if the traditional currency they are linked to changes.
This means that a pound-linked stablecoin will go up in price against the dollar when sterling gains on the international market.
It makes them much better to use as a type of payment than Bitcoin or other cryptocoins.
The government said it would explore ways to make the UK tax system more “competitive” so that the crypto asset market could develop here.
“It’s my ambition to make the UK a global hub for crypto asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” said chancellor of the exchequer Rishi Sunak.
“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.”
The Financial Conduct Authority will launch an event in May where it will be asking the industry what it wants.
There will also be a group of regulators and industry, chaired by economic secretary to the treasury John Glen, which will advise the government on what to do.
The treasury said: “In his Mansion House speech in July 2021, the chancellor set out his vision for the future of the financial services sector, which included a plan to ensure that the UK remains at the forefront of technology and innovation.
“This was one of four key components of that vision, with the ultimate aim of building a financial services sector that continues to be one the rest of the world looks towards.”
