The UK Wants to Become a Global Cryptoasset Technology Hub

On April 4th, 2022, the UK government announced “…moves that will see stablecoins recognised as a valid form of payment as part of wider plans to make Britain a global hub for cryptoasset technology and investment.” This represents a bold move, with the UK being the first G20 nation to show its hand with the outlines of a crypto strategy and stake a claim for sector leadership. Key drivers here include the desire to tap this growth sector as part of a push to generate new revenue sources; the rising importance of crypto businesses as creators of high skilled jobs and attractors of global talent; and the rising numbers of ?crypto holders in the UK population - among younger people in particular. You can read the full announcement here.

While this is just an announcement and the full details are yet to be revealed, the range of measures are more wide ranging than elsewhere, and it could catalyse a “rush to crypto” by other G20 and OECD nations in particular. This in turn could help to demystify crypto for the wider population and add a seal of approval to stablecoins – considered the safest and least volatile form of crypto asset.

The key headlines are that:

• Stablecoins will be brought within regulation, paving the way for their use as a recognised form of payment in the UK
• This is part of a series of measures intended to make the UK a global hub for cryptoasset technology and investment
• There will be legislation to establish a ‘financial market infrastructure sandbox’ to enable firms to experiment and innovate
• The Financial Conduct Authority will hold a two day ‘CryptoSprint’ in May with industry participants, seeking views directly from industry on key issues relating to the development of a future cryptoasset regime
• The government is working with the Royal Mint on a Non-Fungible Token (NFT) this summer as ‘an emblem of the forward-looking approach the UK is determined to take’
• A Cryptoasset Engagement Group will be established to work more closely with the industry
• The government will explore how to enhance tax system competitiveness to encourage further development of the UK cryptoasset market
• A review will be conducted of how Decentralised Finance (DeFi) loans are treated for tax purposes.

We look forward to seeing how this develops and would welcome your views on the announcement, the underlying strategy, and the possible implications for other nations.?