The UK is set to introduce new laws by mid-2024, paving the way for stablecoins and cryptocurrency custody frameworks.

The UK is working on introducing comprehensive stablecoin legislation by the summer of 2024. Economic Secretary Bim Afolami announced at the recent Innovate Finance Global Summit, emphasizing the government's commitment to establishing a robust regulatory environment for crypto-related activities.

Based on the 2023 Financial Markets Act

In June 2023, the UK passed a crucial Financial Markets Act, integrating stablecoins and other cryptocurrencies into regulated financial activities. This foundational law sets detailed regulations for various aspects of the crypto space, including pledging, trading operations, and digital asset custody.

Comprehensive Regulation Approaching in the UK

Afolami elaborated on the steps the UK government will take to bring crypto asset activities under formal regulation. He stated, "We are now fast-tracking legislation to implement our final proposals and regimes." With this legislation, activities such as operating cryptocurrency exchanges and custodial services for client assets will fall under regulatory oversight.

The development of this regulatory framework has been informed by key insights from local regulatory bodies including the Financial Conduct Authority (FCA) and the Bank of England (BoE). In early 2023, these institutions explored potential structures for the stablecoin regime, deciding that BoE would oversee providers impacting the financial system, while FCA would oversee the broader crypto market.

Political Transition Adds Uncertainty

Afolami initially revealed plans to push stablecoin legislation in February of this year, with a goal of completion within six months. However, with the UK approaching elections, the current Conservative-led government's efforts to position the UK as a crypto hub face the possibility of being replaced by the Labour Party, leaving some crypto initiatives in a state of uncertainty.