Last month UK Finance Minister Nadhim Zahawi announced that the government would be offering support for Stablecoin & those that wish to use Cryptocurrency to make payments. The long-awaited Financial Services and Markets Bill is designed to help the UK be more competitive in terms of financial services, something that many feel is much needed following Brexit.
The Regulation of Cryptocurrency
The discussion surrounding the regulation of Cryptocurrency and whether there should be legislation in place is a long ongoing one & one that is unlikely to wrap up fully anytime soon. Of course, there are strong arguments on both sides of the fence when it comes to looking at whether Cryptocurrency should be regulated – and this is what has caused the delay and debate surrounding any decisions being made. Although details are still being decided, the UK Government has put itself at the forefront of the debate, pushing the UK as being ahead of the curve when it comes to technology and therefore it should be one of the first to introduce official regulation surrounding the use of virtual currency. Economic Secretary of the Treasury John Glen recently said “If crypto technologies are going to be a big part of the future, then we, the U.K., want to be in — and in on the ground floor,” which indicates that the UK Government wants to do something sooner rather than later.
What Will Happen with Stablecoin?
As part of the announcement, Nadhim Zahawi discussed consumer rights and how people will be protected if they do decide to use this method of payment stating “Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while also acting to protect access to cash for the millions of people that rely on it.” Various members of parliament have discussed Cryptocurrency recently, alongside the Treasury who have been vocal in their vow to look at ways in which the UK can remain competitive, something needed since Brexit and the UK's exit from the EU. As the new chancellor of the UK, the announcement back in July was his first official speech in his new role – where he discussed the benefits of being able to use Cryptocurrency and how he planned to drive the UK into a transformation of its financial services sector saying “The British people can rest assured that we are getting on and delivering the benefits of Brexit. The measures I have announced tonight will unleash growth across our financial services sector and will allow us to unlock tens of billions of pounds of investment into the UK economy”.
We might be quite a while off from using Stablecoin and other Cryptocurrencies to pay for our weekly grocery shop, but this announcement does show that the UK Government is taking the investment and use of virtual currency seriously. Having some sort of regulation in place will help to give the general British public confidence in using this sort of payment method, something which they may have lacked before any official backing.
Will We See More Virtual Currency Regulation?
The question surrounding Cryptocurrency regulation is a long ongoing one and is set to continue, even if the government plans to bring in Stablecoin go ahead. In the grand scheme of things, Cryptocurrency is a new introduction to the world of finance, which is why it hasn’t yet had any real rules or regulations attached to it. The problem is that it is increasing in popularity and unlike things such as stocks and shares investments or even holding a bank savings account; it doesn’t really have any level of consumer protection.
The argument for regulation of this industry is mostly driven by a need to keep consumers safe – for example, we know that gambling websites have to operate under a strict set of rules to keep their users safe and that the FCSC means that your money is protected if stored with a registered bank. Currently, there is nothing along those lines for any sort of Cryptocurrency or NFT – which leaves users open to being taken advantage of.
The problem comes with those that enjoy using Cryptocurrency because of its untraceable nature & therefore would worry about how much of a paper trail it would leave if changes were made. For example, fast payment casinos that accept Cryptocurrency allow users to bet their money without leaving a trace of the transaction on their actual bank account – handy for upcoming mortgage or loan applications.
The reality is that Cryptocurrency is something that is becoming more popular and mainstream so it makes sense that some sort of regulation is put in place to keep the industry safe – however, as yet we don’t know what that will be.
What Does The Future Look Like for Cryptocurrency?
As we have learned from the recent Bitcoin crash, Cryptocurrency is still unpredictable. Unlike other investment choices, there isn’t a long history/track record which means that looking back to how it has performed in the past and using this to guess how it will react in the future is much more difficult. However, what we can do is assume that Cryptocurrency, NFTs and other virtual products aren’t going anywhere and actually are likely to continue to grow in popularity – and therefore a level of regulation will be needed.
What we may see first is the regulation of who can offer the chance to buy/sell Cryptocurrency – to prevent people from signing up and investing their money via an app that doesn’t do what it promises. Instead, we could see a launch of official apps and regulations to ensure that those signing up to invest in any sort of digital product have peace of mind that their investment is safe and sound although, of course, there are still no guarantees that the value of their investment won't decrease over time.
The future remains to be seen for Cryptocurrency and it will be interesting to see what bearing the UK Government's recent announcement has on how Cryptocurrency will be viewed in the future.