The United Kingdom changes its mind and opens up to cryptocurrencies. Despite reluctance from regulators, the UK government has pledged to ease taxes on crypto assets, accept stablecoins as payment, and test the possibilities offered by blockchain. The UK will also issue its own non-fungible tokens (NFTs).
The United Kingdom wants to encourage the crypto sector
The UK aims to gain a foothold in the cryptocurrency market. Despite frequent and regular warnings from the central bank, the country has announced its intention to become a “global hub” for the digital asset industry.
In a press release issued on Monday, April 4, 2022, the UK government announced its intention to make the UK a “global hub for cryptocurrency technology and investment”.
According to John Glenn, Economics Secretary of the UK Treasury, the UK is “open for business, for companies in the cryptocurrency sector”. This is the first time that the UK has shown strong interest in digital currencies such as bitcoin.
So far, the country has been rather cautious in imposing particularly strict rules. “We see great potential in cryptocurrencies. We will not lower our standards, but we will maintain a technology-neutral approach,” the official noted.
The easing also aims to make it easier for UK fund managers to access cryptocurrencies. Additionally, reforms to the tax system will allow decentralized financial services (DeFi), such as lending, to be included in UK taxation.
Rishi Sunak, Chancellor of the Exchequer and Second Lord of the Treasury, explained: “My ambition is to make the UK a global center for crypto-asset technology. The measures we have outlined today will help ensure that businesses can invest, innovate and grow in this country.”
For example, the UK hopes to pass legislation to bring stablecoins into payments regulation. The government also wants to see how to improve the country’s competitiveness and encourage the development of crypto assets in terms of taxation. In May, UK regulators will hold discussions with industry on the development of future encryption regimes.
A change of direction to come
As part of this openness, the UK will issue official non-fungible tokens (NFTs) by summer 2022. To implement this amazing project, the country’s finance minister, Rishi Sunak, turned to to the Royal Mint, the organization responsible for minting the British currency, the pound sterling.
“This move demonstrates our commitment to a forward-looking approach to crypto assets in the UK,” the post read. As noted in an article published by The Guardian, no further details have been released by the government at this time. We do not know if other NFTs will be issued, nor the usefulness of the operation.
Finally, the government also aims to rely on blockchain to optimize the functioning of UK financial markets. According to the country, blockchain can enable “decentralized data synchronization and sharing, potentially enabling greater efficiency, transparency and resilience.”
The government is currently developing an infrastructure to test the possibilities of blockchain. At the same time, an ambitious research program will be set up to assess the benefits of blockchain in the context of sovereign debt management.
Until now, the UK has been rather reserved about cryptocurrencies. Various regulations enacted by lawmakers have hampered the development of the industry in the UK market.
In recent months, exchanges such as Crypto.com (CRO), Coinbase or eToro have also been forced to remove certain advertisements at the request of regulators. Meanwhile, HMRC, the UK tax office, levies a tax on all exchanges in the country.
Recently, the FCA even ordered the closure of all Bitcoin (BTC) ATMs in the UK. In this context, the British government’s announcement was indeed a surprise.
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The UK is changing its rhetoric on cryptocurrencies
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