U.K. lawmakers agreed on new rules for stablecoins on Thursday – as the government promised to consult on further crypto regulations and a digital pound in the coming weeks.
In April, Rishi Sunak – at the time finance minister, but since promoted to prime minister – said he wanted to make the U.K. a hub for crypto.
Lawmakers are now poring over government proposals to regulate stablecoins, which are cryptocurrencies that seek to maintain their value against the pound or the U.S. dollar, and which can be used as a means of payment.
“Certain crypto assets and distributed ledger technology could drive transformational changes in financial markets,” recently appointed Economic Secretary to the Treasury Andrew Griffith told the committee probing the Financial Services and Markets Bill, adding that there are also “risks to consumers and financial stability.”
“We wish to tentatively seize those opportunities … not fall behind other markets, but also proceeded in a cautious way,” Griffith added, referring to progress in regulating crypto in rival jurisdictions such as the U.S. and European Union.
“The government’s position is to start with those most stable, least volatile coins likely to be used by intermediaries as a settlement currency and then we will go forward and consult from there,” Griffith said.
The bill also gives the U.K. Treasury powers to extend the regulatory net beyond stablecoins, if Parliament consents. Griffith said the consultation on how to do that will come out before Parliament is suspended for Christmas.
Griffith also expressed optimism about issuing a digital pound, on which the Treasury and Bank of England are also due to consult in the coming weeks.
“It’s not a trivial exercise, creating a new central bank digital currency,” Griffith said. “My own hope is that it is a ‘when,’ not an ‘if’.”
Committee lawmakers voted unanimously in favor of the new crypto measures on Thursday, but comments made by the left-wing Labour Party give a flavor of the opposition lawmakers’ approach.
Distributed ledger technology could “create high skilled, high productivity jobs across the U.K.,” said the Labour spokesperson on Treasury matters, Tulip Siddiq. She then cited recent crypto market turbulence to add that stablecoins’ “instability can pose a significant risk to the public.”
“On this side of the House [of Commons], we are yet to be convinced that ministers have acknowledged the scale of the threat that the assets can pose to consumers and our constituents,” Siddiq said.
A delay to crypto laws “risks leaving our country behind in the fintech and blockchain race,” Siddiq said. “In the absence of a comprehensive regulatory regime, the U.K. risks becoming a center for illicit finance and crypto activity.”
While Griffith’s governing Conservative Party has a substantial majority of lawmakers in the House of Commons, some recent polling suggests the Labour Party could take over if a general election was called.
The bill must also be approved by the House of Lords, which is the upper house of the parliament, before it is passed into law.