The government has moved closer to bringing cryptocurrency into the mainstream by unveiling plans that would allow so-called stablecoins to be used as a means of payment in the UK.
Stablecoins, a form of crypto that is pegged to normal currencies, will be regulated the same as normal money when used for payments, the Treasury said Monday.
Unlike highly volatile cryptocurrencies such as Bitcoin, which can lose much of their value within minutes, stablecoins only change in value if the traditional currency they are pegged to changes.
This means that a stablecoin pegged to the pound will rise against the dollar when the pound gains in the international market.
This makes them much better to use as a type of payment than Bitcoin or other cryptocurrencies.
The government has said it will explore ways to make the UK tax system more “competitive” so the crypto asset market can grow here.
“My ambition is to make the UK a global hub for crypto asset technology, and the measures we have outlined today will help ensure that businesses can invest, innovate and grow in this country,” said 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 for the 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 ask 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 speech at Mansion House in July 2021, the Chancellor set out his vision for the future of the financial services sector, which included a plan to ensure the UK remains at the forefront of technology and innovation.
“It was one of four key elements of that vision, with the ultimate goal of building a financial services industry that continues to be the one the rest of the world looks to.”