UK Planning Adoption Of Stablecoins For Payment And Blockchain technology In Financial Markets

UK Adopts Stablecoins

Welcome back to the Tribe! In this post we dive into the announcement that UK adopts stablecoins and blockchain into financial markets.

Nothing should be considered investment or financial advice. Enjoy the ride!

UK Adopts Stablecoins

In its move to make the UK a crypto hub, The government plans to amend the existing regulations and bring certain stablecoin payments into its regulatory purview.

Plan To Adopt Stablecoins

The UK treasury yesterday released the response to the consultation and call for evidence on the regulatory approach to stablecoins. In the document, most respondents called for the delineation between stablecoins linked to a fiat currency and those that reference other assets.

Speaking of legislation, the treasury believes that some tokens already fall within relevant legal frameworks and would not require any special legislation to regulate them. According to the document;

“The government considers that some forms of digital money or tokens example, those intended for wholesale settlement –– for may already fall within the relevant UK legal frameworks. However, this also depends on the structure of the token and nature of the activities concerned.”

So future legislation will focus on providing a clear framework in the UK, and also clarity as to the scope of activities to which the regulatory regime applies. Rather than crafting a whole new regulation.

Following the earlier call to delineate between stablecoins backed by fiat currency and those linked to other assets. The adoption of stablecoins as a form of payment will adopt the former rather than the latter. A possible reason is the lesser risks posed by stablecoins linked to fiat currencies.

According to the document:

“The government proposes that the regulation should capture all stablecoins that reference fiat currencies, including a single currency stablecoin or stablecoin based on a basket of currencies.”

This decision stems from the belief that stablecoins backed by one or more fiat currencies have the capacity to develop into a widespread form of payment.

The decision to adopt stablecoins does not come as a surprise because the crypto asset was favored in a report earlier released by the Bank of England’s Financial Policy Committee (FCP).

Bank of England To Test Distribute Ledger Technology (blockchain) In Financial Markets.

The Economic Secretary to the Treasury John Glen, representing the Chancellor delivered a keynote speech at the Innovative Finance Global submit during the Fintech week 2022.

In his speech, he reiterated the Chancellor’s resolve to support economic recovery and make the UK the world’s preeminent financial center. To achieve the latter, he believes that Fintech plays a very crucial role that can not be overlooked.

Speaking of blockchain technology, he said:

“Never in the history of commerce has there been invention as hyped and misunderstood as Distributed Ledger Technology and Blockchain.”

He further added that the technology might be a challenge but it is also an opportunity.

He also added that:

“If crypto-technologies are going to be a big part of the future, then we – the UK – want to be in, and in on the ground floor. In fact, if we commit now… if we act now… we can lead the way.”

On the Government’s response to Blockchain technology, John Glen said:

“Because we want this country to be a global hub – the very best place in the world to start and scale crypto-companies. If there is one message I want you to leave here today with, it is that the UK is open for business – open for crypto businesses.”

He raised the usual energy concerns of crypto mining in his address when he said:

“On carbon footprint, the UK is a world-leading ‘center for green finance’… so, of course, we will be looking closely at energy usage associated with certain crypto-technologies.”

Despite this, the government is poised to harness the potential of blockchain technology, with what Glen called a ‘detailed plan’.

The coming days are going to witness a lot of activities to incorporate crypto technology into the UK financial system as the Authorities move to create a crypto hub.

Other News – Phishing Attack on Trezor Users

Trezor cryptocurrency wallet users fell to a phishing scam deployed through the popular mass mailing and newsletter service MailChimp. The attacker used a cloned Trezor suite to lure users into creating a new seed phrase for their wallets.

Reports claim the attacker is a MailChimp insider but no confirmation has been provided thus far. The news comes a few weeks after a few digital asset companies supposedly experienced a data breach from a third-party service.