A draft regulatory framework for crypto assets in the United Kingdom is expected to be ready early next year, according to a Treasury official who spoke at City & Financial Global’s Tokenisation Summit in London on Nov. 21. The regulatory framework, which was initially anticipated last summer, was delayed due to a general election and the subsequent change in government. The Labour government under Prime Minister Keir Starmer, which took office on July 5, is now tasked with presenting the new regulations.
Economic Secretary to the Treasury Tulip Siddiq announced that the upcoming regulations will address stablecoins, staking services, and broader cryptocurrency regulation. Siddiq emphasized the benefits of developing the framework in a single phase, stating that it is a simpler and more effective approach. She also highlighted that stablecoins do not fit well within existing payment services regulations, which has led to the development of dedicated legislation for their use. The initial discussions on stablecoin regulation began in October 2023, and the new framework is not expected to be finalized before 2025.
Regarding staking services, Siddiq indicated that the government intends to remove legal uncertainties surrounding their regulation. The crypto industry has voiced concerns over staking being designated as a “collective investment scheme,” which would impose additional restrictions. Siddiq suggested that this designation may not be appropriate, and the government plans to proceed with regulatory adjustments to provide clarity.
The United Kingdom’s approach to cryptocurrency regulation has seen shifts over the years. The former Conservative government expressed a desire to establish the country as a cryptocurrency hub, but it has often been viewed as a challenging regulatory environment, largely due to the Financial Conduct Authority’s independent stance on crypto-related activities.
The European Union’s Markets in Crypto-Assets (MiCA) regulation is set to come into effect by the end of the year, offering regulatory certainty across Europe. With the EU advancing its crypto regulations and the United States seen as increasingly crypto-friendly, industry observers believe that the UK must adapt quickly to remain competitive in the multibillion-dollar crypto industry. The Labour government has already made efforts, such as proposing a bill in September to clarify the legal status of non-fungible tokens (NFTs), cryptocurrencies, and carbon credits by recognizing them as property.