On April 15, 2024, at the Innovative Finance Global Summit, the UK’s Economic Secretary, Bim Afolami, announced plans to introduce new laws to regulate the issuance and usage of stablecoins and crypto in the country. This comprehensive regulatory framework is expected to be unveiled by July 2024 and will position the UK as a frontrunner in regulating the proliferating crypto industry.

The UK’s cryptocurrency industry is one of the fastest-growing crypto markets globally, outpacing Germany and the US after experiencing aggressive growth over the last decade. The popularity of cryptocurrencies in the country and their viability as legitimate assets have seen the country amass over three million cryptocurrency users. These users are estimated to have a combined wealth of over $3.72 billion in cryptos. Furthermore, the UK crypto industry grossed an estimated $1.9bn in revenue in 2023 and is projected to reach $2.53bn in 2024.

This exponential growth and market penetration, as mainstream businesses in the UK are increasingly adopting digital currencies, have fueled the need for regulation in the industry.

What to anticipate with the new crypto laws

Today, cryptocurrencies have impacted numerous industries, from becoming the newest currency facilitating transactions in online banking to running casino demos in online gaming. Unsurprisingly, the UK aims to foster a vibrant and secure crypto environment in the country by establishing clear rules of operation in the crypto world.

At the Innovative Finance Global Summit, Bim Afolami remarked that the final proposals for the regime were being put in place to ensure the legislation was delivered sooner rather than later. He added that numerous crypto asset activities would come under the regulatory perimeter for the first time.

• Institution of licensing requirements for stablecoin issuers
• Provision of clarity on the tax implications of staking
• Employment of more rigorous scrutiny on the buying and selling of digital assets
• Necessitation of resilient security measures for custody services providers

The UK’s Economic Secretary affirmed that the UK aims to attract businesses and investors in this rapidly growing sector while ensuring the country’s consumers are protected against financial risks and fraudulent activities.

UK’s journey to legislation in the cryptocurrency ecosystem

According to the UK Financial Conduct Authority, in 2019, only 42% of UK adults had heard of cryptocurrencies. In 2022, however, 91% of UK adults were aware of cryptocurrency. In addition, in 2022, the UK government expressed interest in regulating the crypto industry.

• Early 2022 – British Prime Minister Rishi Sunak unveiled plans to support crypto institutions
• February 2023 – The FCA and BoE began consultations on developing a regulatory framework for stablecoins
• July 2023 – the UK’s Law Commission overhauled domestic crypto laws

Twelve months after this historic move by the UK Law Commission, we anticipate a final regulatory framework for crypto companies and cryptocurrencies being unveiled. However, this may not be guaranteed due to the upcoming general elections in the second half of 2024.

The potential impact of the Labour Party taking over power and its uncertain stance on crypto regulations could lead to delays or revisions in the regulations. This uncertainty may affect the UK cryptocurrency industry similarly to the US market, which is losing users to other jurisdictions due to regulatory uncertainty.