The UK government is set to introduce stablecoins as a recognised form of payment in a bid to make the country a “global cryptoasset technology hub”, the Treasury has announced.
Stablecoins are a type of digital currency that attempt to offer price stability and are backed by a reserve asset which, in this case, would be the UK pound sterling.
The UK’s stablecoin would be regulated by the government, providing businesses with “the confidence they need to think and invest long-term,” Chancellor of the Exchequer Rishi Sunak said on Monday.
“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country. This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation,” he added.
Katharine Wooller, MD of the UK-based crypto wealth platform Dacxi, told IT Pro that the Chancellor’s announcement is a welcome move:
“The UK has long been seen as a hub for fintech, but, until recently, the reception for crypto has been lukewarm at best, and the regulatory attention patchy,” she said.
According to Wooller, the move “should ease the path for adopting a Central Bank Digital Currency (CBDC)”, a consultation that was launched in April 2021.
This would help the UK gain valuable ground ahead of the EU’s plans to make cross-border payments quicker and cheaper through the use of blockchain and stablecoins by 2024:
“Regrettably, the UK is well behind the curve – it is estimated that 80% of the world’s Central Banks have CBDC projects,” Wooller told IT Pro.
One of the examples is India, which last month announced plans to launch a CBDC called the digital rupee in a bid to boost the digital economy. Meanwhile, the reserve banks of Australia, Singapore, Malaysia, and South Africa are set to test the use of CBDCs for international settlements in a similar manner to the EU, in the hopes that it will reduce the time and costs for these types of transactions.
The UK Treasury’s announcement comes three months after a report from the House of Lords found no “convincing case” for the UK to introduce a CBDC.
