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UK Finance Minister Rishi Sunak is expected to announce a new cryptocurrency regulatory regime in the coming weeks, sources told CNBC;
The announcement will focus specifically on stablecoins, digital assets that derive value from existing currencies such as the U.S. dollar;
The Treasury Department has been in discussions with a number of companies and trade groups, including cryptocurrency exchange Gemini.
The U.K. government will soon unveil plans to regulate the cryptocurrency market, with a focus on stablecoins, according to four industry sources familiar with the matter.
U.K. Finance Minister Rishi Sunak is expected to announce a new regulatory regime for cryptocurrencies in the coming weeks, sources told CNBC, speaking on condition of anonymity because the information has not yet been made public.
The Treasury Department declined to comment when asked by CNBC about the plan.
Details of the plan are still being discussed. Sources interviewed by CNBC said the plan could be beneficial for the industry, providing legal clarity to an industry that has so far been largely unregulated.
Treasury officials have shown a willingness to understand the intricacies of the cryptocurrency market and stablecoins, digital assets that derive their value from existing currencies such as the U.S. dollar, the sources said.
The department has been in discussions with some companies and trade groups. Among them was cryptocurrency exchange Gemini, one of the sources said. Gemini issued the stablecoin Gemini dollar, which is pegged to the U.S. dollar.
Over the past few years, as interest in cryptocurrencies has broadly increased, the use of stablecoins has also grown exponentially. The world’s largest stablecoin, Tether, now has more than $80 billion in total circulation, up from about $4 billion two years ago.
But the tokens have also drawn the attention of regulators who fear they may not be backed by an equivalent amount of reserves and be used for money laundering and other illicit activities.
At the same time, regulators worry that bitcoin and other cryptocurrencies, which are more anonymous and uncontrollable than the financial system, could be used to evade sanctions during the Russia-Ukraine conflict.
The Bank of England called on policymakers on Thursday to expand the regulatory framework to limit the risks cryptocurrencies pose to financial stability.
Bank of England deputy governor Sam Woods has sent a letter to several bank chief executives stating that banks and investment firms are showing increased interest in entering various cryptocurrency markets.
The Treasury Department’s move is seen as a response to Biden’s executive order requiring different U.S. federal agencies to coordinate on regulating cryptocurrencies, the sources said. Some in the industry have lamented the lack of similar action in the UK.
Some firms, including Revolut, Blockchain.com and Copper, may be forced to close their UK cryptocurrency operations if they fail to meet the March 31 deadline to register on the Financial Conduct Authority’s Register of Crypto Assets .
