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The UK is reportedly planning to regulate stablecoins as a payment method and the Royal Mint is to begin issuing a series of non-fungible tokens (NFTs).
According to the HM Treasury announcement, the Royal Mint is to issue a collectible series of NFTs and the UK is looking to regulate stablecoins as a payment method.
The announcements came along with a series of processes designed to make the UK a “global crypto-asset technology hub”.
The measures send a “crystal-clear message”, said Amrit Dhami, associate analyst for thematic research at GlobalData. “Before crypto-assets become part of British financial services, they’ll need to be well-cushioned by airtight regulation.”
A stablecoin is a cryptocurrency that has a value tied to that of a ‘fiat’ currency, like the pound or US dollar. Stablecoins such as Tether and USDC are widely adopted within the crypto landscape as a ‘vehicle currency’ to exchange crypto and fiat currencies.
However, unlike Bitcoin, the value of stablecoins goes up and down with fluctuations. This is the reason why stablecoins are considered a viable payment method.
After a consultation on the impact of various crypto assets on the financial services sector, the UK government has concluded that “with appropriate regulation, [stablecoins] could provide a more efficient means of payment and widen consumer choice”.
The UK plans to regulate stablecoins by expanding the scope of its current e-money rules. These cover pre-paid payment cards and require issuers to register with the Financial Conduct Authority to discourage money laundering.
“Bringing stablecoin within an expanded e-money framework feels like a sensible way to go and the most obvious starting point for defining [stablecoins] in the context of their use as a means of payment,” said Oliver Irons, a partner at law firm Simmons and Simmons.
Suggested read: UK FCA Orders Illegal Crypto Service Providers to Shut Down ATMs