By regulating stablecoins and issuing NFTs, the UK hopes to become a global center for encryption technology and innovation

The British government will regulate stablecoins and is taking a series of measures to regulate and utilize cryptocurrencies, including tokens such as Bitcoin. It will also work with the Royal Mint to launch NFTs. The ultimate goal is to "make the UK a global center for crypto asset technology and innovation."

In a speech at the Innovate Finance Global Summit on Monday, John Glen, economic secretary to the UK Treasury, said: "I can confirm that we will introduce legislation to bring certain stablecoins into our payments framework...creating conditions for stablecoin issuers and service providers to operate and develop in the UK, which will also enable consumers to use stablecoin payment services with confidence...The government will introduce this legislation as part of its ambition to provide a world-leading regulatory regime for stablecoins."

Specific measures in the UK include:

• Bringing stablecoins under regulatory jurisdiction would pave the way for them to be used as a recognised method of payment in the UK.

• The announcement is part of a series of measures to make the UK a global hub for crypto-asset technology and investment.

• Legislation establishing a “Financial Market Infrastructure Sandbox” to help firms innovate, an FCA-led “CryptoSprint” to launch NFTs in partnership with the Royal Mint, and the establishment of an engagement group to work more closely with industry.

Chancellor of the Exchequer Rishi Sunak said: “My ambition is for the UK to become a global hub for crypto-asset technology, and the measures we have outlined today will help ensure firms can invest, innovate and scale up in this country. We want to see the businesses of tomorrow – and the jobs they create – come to Britain, and through effective regulation we can give them the confidence they need to think and invest for the long term. This is all part of our plan to ensure the UK financial services industry remains at the forefront of technology and innovation.”

Stablecoins are crypto assets that are typically pegged to a fiat currency such as the U.S. dollar and are designed to maintain a stable value. With proper regulation, they can provide more efficient payments and expand consumer choice.

The UK government intends to legislate to bring stablecoins used as a means of payment into the scope of payment regulation, creating conditions for stablecoin issuers and service providers to operate and invest in the UK. By recognizing the potential of this technology and regulating it immediately, the government can ensure financial stability and high regulatory standards so that these new technologies can eventually be used reliably and safely.

John Glen also said that the UK will actively explore the potential transformative advantages of distributed ledger technology (DLT) in the UK financial market, enabling data to be synchronized and shared in a decentralized manner, potentially achieving greater efficiency, transparency and resilience.

The government will legislate to establish a financial market infrastructure (FMI) “sandbox” to enable firms to experiment and innovate in the provision of market-supporting infrastructure services, particularly by testing distributed ledger technologies. The government further confirmed that it will launch a research program to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.

John Glen also confirmed that the UK government will consult on wider regulation of the crypto assets industry later this year.

Other measures include:

The UK government will explore ways to improve the competitiveness of the UK tax system to encourage further development of the UK crypto asset market. It will review how DeFi loans (where crypto asset holders lend them out for a return) are treated for tax purposes, and the government will also consult on expanding the investment manager exemption to include crypto assets.

The “CryptoSprint,” led by the FCA, is working with the Royal Mint, a government-owned institution responsible for issuing NFTs in the UK, to be issued before the summer.

The Minister of Economy will establish and chair a Crypto-Asset Engagement Group, bringing together key figures from regulators and industry to advise the government on issues facing the crypto-asset industry.

Glen also noted that the government is watching the development of Web 3, saying: "No one knows exactly what the final model of Web3 will be yet, but there is a high probability that blockchain will be an integral part of its development. We want the country to be at the forefront and look for the greatest economic opportunities."