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The United Kingdom to Introduce Stablecoin and Crypto Staking Legislation Within Six Months

UK's progress in developing an all-encompassing crypto legislation

The United Kingdom is on the brink of significant regulatory advancements in the crypto space, with stablecoins and crypto staking set to be governed by new laws within the next six months. Economic Secretary to the Treasury, Bim Afolami, revealed at a Coinbase-hosted crypto event in London on February 19 that the government is "working very hard" to expedite the passage of crypto-specific legislation. 

This move is part of a broader effort to cement the UK's status as a global crypto hub, particularly before this year's general election. 

Afolami said:

"We’re very clear that we want to get these things done as soon as possible. And I think over the next six months, those things are doable,”

Despite the urgency, Afolami remained reserved on the specifics of the forthcoming legislation. When questioned about the details, he stated, 

"Short answer is, I don’t know [...] There’s just a huge amount going on, so I don’t want to commit to that now," 

This initiative follows Prime Minister Rishi Sunak's 2022 pledge to make the country a "global crypto hub," emphasizing the importance of creating a conducive environment for crypto firms to "invest, innovate and scale up" in the UK. However, the journey towards clear and meaningful regulation has been slow, with the crypto community eagerly awaiting more definitive action.

Developments and recommendations on crypto regulation

Tangible strides have been made toward establishing a comprehensive legal framework within the UK. The journey began in July 2022 when the UK Law Commission published four recommendations aimed at reforming domestic laws to better accommodate and protect the unique features of digital assets. Among these recommendations was the innovative proposal to create a "distinct" category of personal property specifically for digital assets, ensuring their unique characteristics are legally recognized and safeguarded.

Further emphasizing the need for nuanced legal analysis, the commission advocated for a common law review of crypto assets. It also suggested the establishment of an industry-specific panel comprising technical experts, academics, and legal practitioners. This panel would serve as an advisory body to courts on complex crypto-related legal matters, bridging the gap between rapid technological advancements and existing legal frameworks.

On October 30, 2023, the UK government took a decisive step by announcing its intention to introduce more crypto-specific regulations in 2024. A significant focus of this upcoming legislation is the regulation of fiat-backed stablecoins, which are to be brought under the oversight of the Financial Conduct Authority (FCA). 

As the UK gears up for its general election, expected to take place in the latter half of the year, the political landscape could influence the pace and direction of crypto regulation. The Labour government, currently leading in early-stage polls and perceived as less sympathetic to crypto, may impact the regulatory climate.