Latest news with #HM_Treasury
Finextra
3 days ago
- Business
- Finextra
The Payments Association urges Chancellor to clarify the UK's position on stablecoins
The Payments Association, a trade group representing the payments sector, has urged The Chancellor of the Exchequer Rachel Reeves to take a clear stance on stablecoins, pointing out that her last announcement on crypto in April did not include any government plan to boost the stablecoin sector. 0 This comes as The Payments Association publishes a report on stablecoins, encouraging the UK government to take immediate and decisive action to position the UK as a global hub for digital money and financial innovation. The report - developed by the Association's Digital Currencies Working Group - delivers an analysis of current regulatory proposals and outlines key policy recommendations to unlock the transformative potential of stablecoins. While acknowledging recent steps taken by HM Treasury and the Financial Conduct Authority (FCA), the report warns that unclear rules and fragmented oversight risk pushing talent and capital offshore to more proactive jurisdictions like the US, EU, Hong Kong, Singapore and South America. What are Stablecoins? Stablecoins are digital assets that maintain a stable value, typically by being fixed to a currency, such as the Pound, although 99% are currently back by the dollar. Although their first use case was to offer a bridge between the often-volatile world of cryptocurrencies and traditional finance, several developments have suggested stablecoin is evolving quickly and is seeing significant real-world uptake. In fact, according to Forbes, Stablecoins are one of the clearest signs that global finance in general is evolving, processing more than $27 trillion in volume in 2024 alone — more than Visa and Mastercard combined. Just in the month of May, Worldpay has teamed up with BVNK to enable stablecoin payouts for their clients in the US and Europe. Meanwhile, several Korean banks have joined forces to issue joint Korean stablecoin. The Wall Street Journal also reported that several US companies co-owned by JP Morgan Chase and Bank of America were considering doing the same. In recent days, even Deutsche Bank has announced exploring issuing its own stablecoin or joining a stablecoin industry-led initiative. What does the report say? Riccardo Tordera-Ricchi, Director of Policy & Government Relations at The Payments Association, said: 'This is a pivotal moment. China has opened the way by issuing a CBDC in 2019. The EU has made it clear they will do a digital euro. The US has banned CBDCs and is going full stablecoins: in the global race towards digital money the UK government cannot afford to lose more time. We urge the Chancellor to make a clear statement about the UK's commitment to develop a strong stablecoin environment. The market is evidence of clear use cases: from pay-ins and payouts to corporate treasury. Political leaders have to realise that there is no implementation of the AI agenda nor tokenisation of real-world assets without a clear and competitive stablecoins regulatory framework. Failing to grasp the importance of stablecoins means condemning the UK to irrelevance, and will compromise its role of global financial centre. I don't think the Labour government can fail on delivering growth.' The key findings and recommendations of the report include: • A Strategic Opportunity: Stablecoins can supercharge cross-border payments, support financial inclusion, and transform how individuals and businesses store and move money. But without the right regulation, the UK risks missing out on billions in investment and innovation. • Regulatory Urgency: The current draft legislation treats stablecoins as generic cryptoassets, failing to recognise their distinct role in modernising payments. The UK must clarify its regulatory timelines and align the Treasury, FCA, and Bank of England under a unified framework. • Global Competition Is Heating Up: With Europe implementing MiCA and the US embracing bank-issued digital assets, the UK cannot afford to sit on the sidelines. Regulatory uncertainty is already driving firms to friendlier markets. • A Proportionate, Risk-Based Approach: A one-size-fits-all model won't work. The UK must adopt a tailored framework that supports use cases from decentralised finance to programmable money and AI-driven financial tools, while maintaining financial stability. • Stablecoins as a Tool for Inclusion: Fintechs are already using stablecoins to serve underserved communities with faster, cheaper access to digital financial services. Regulation must actively support these innovations, not stifle them. • An Open Door to Global Issuers: The UK's strong legal infrastructure, international language, and fintech ecosystem make it an ideal base for stablecoin projects - but only if regulators create the right environment. The report calls for HM Treasury to assume a central coordinating role, urgently advance work on the treatment of stablecoins under payments regulation, overseen by the FCA, and publish a clear, time-bound roadmap. Looking across the globe and forward in time, it also stresses that the UK ecosystem must be interoperable with dollar- and euro-based stablecoins under global standards, and that the Bank of England must adopt a balanced and transparent approach to systemic stablecoins. Lauren Edwards MP (Labour Member of Parliament for Rochester and Strood), Co-Chair of APPG Digital Markets and Digital Money, said: "Stablecoins offer a clear path to supercharging the UK economy. By streamlining cross-border payments, reducing transaction costs, and fostering new financial services, they can unlock billions in investment, drive innovation, and cement the UK's position as a global leader in digital finance." Lord Ranger of Norwood, Co-Chair of APPG Digital Markets and Digital Money, said: 'The global stablecoin market is already over $250 billion and growing fast. It is critical UK government and regulators understand the risks, opportunities and pace of change so that we can retain and build on our valuable position as a leading global financial centre." Natalie Lewis, Partner at Travers Smith and Lead of TPA Working Group Digital Currency said: The global race to lead the digital assets economy is intensifying. Jurisdictions all over the world are taking decisive action to stake their claim to being a hub for stablecoins. The UK needs to take urgent and decisive action to ensure we don't miss out on the transformative economic benefits stablecoins offer, along with the chance to empower UK consumers and businesses with greater choice, speed and security.
Telegraph
3 days ago
- Business
- Telegraph
At last the ‘Iron Chancellor' has turned, but the cost could be fatal
While Rachel Reeves has often invoked the soviet nickname embraced by Baroness Thatcher, she has typically struggled to live up to the 'Iron Chancellor' moniker she craved. Where Thatcher declared 'the lady's not for turning', Reeves has more frequently been found flip-flopping. We now have details of the latest volte-face, and a rough value has been ascribed to the political capital Labour burnt during its first major fiscal event. The price of all goodwill afforded to a new government? £450m, or 0.05pc of the total tax take. Since the winter fuel payment was first scrapped for all pensioners except those in receipt of pension credit, we've been patiently expecting this about-turn, which doesn't scream confidence in government policy. At midday yesterday, HM Treasury confirmed that a new arbitrary figure had been laid down to determine the deserving/undeserving old, this time set at £35,000. Those below this line of personal income will be entitled to £200 per household (up to £300 if all residents are over 80), while those above it are not entitled to keep the money. Yes, that is a personal income allowance to judge a household payment. On £35,001 and live alone? Not a penny. Two of you on £35,000 for a total household income of £70,000? The full amount. One of you above and one below? The payment will be split, and the one earning above the threshold will have to pay theirs back. Will it rise in line with the triple lock? No clue. Where does £35,000 come from as a limit? Well it's less than average earnings and nowhere near any tax bracket, so answers on a postcard please. Will the Government ensure only those entitled to the benefit receive it? No. It will be paid to all and clawed back through PAYE or self-assessment tax returns. Sound complicated? It sure does – and complicated generally means expensive administration. High street accountancy firms will leap on the confusion, but I'm not sure this is the productivity boost Reeves dreamed of. So far, nobody has cobbled together any estimates for how much this system will cost HMRC to develop and implement, but it's not zero. Don't forget, the previous eligibility criterion of being a pension credit recipient has already sparked its own costs. According to former pensions minister, Sir Steve Webb, the flurry of new applicants has already added a £200m annual cost, reducing the benefit to Treasury coffers to just £250m, not £450m, before any admin costs are factored in. That's 0.03pc of the total tax take. He explained: 'These changes wipe out most of the extra revenue which the Government was expecting to get from the winter fuel payment policy. 'Not only has the Government knocked more than a billion pounds off the expected revenue but it has also had to find more than £200m per year extra because of the surge in pension credit claims. 'Overall, the amount raised looks tiny relative to the political damage which the whole episode has caused to the Government.' But it's not just political damage – in the immediate wake of the news, gilt yields rose. Certainly, some element of this is simply factoring in the lower revenues the Government can now expect, but more critically, it is shifting perceptions. The long shadow of Liz Truss's mini-Budget continues to haunt Labour, and they are likely to be undone by their own political spin. Reeves et al oversimplified what happened in September 2022 and tied their hands in the process. Changing policy is a natural part of government and waiting for the next Budget isn't always possible, but when you tell the nation (and markets) that it's fiscally irresponsible to do so, you cannot be surprised when eyebrows are raised. Reeves's Spring Statement already effectively broke her promise of one major fiscal event per year – yesterday's revelation has broken most of the others. The policy is not accompanied by an Office for Budget Responsibility (OBR) forecast (although one is promised for the next Budget), and weren't we told the cut was necessary to fill the black hole? Before the changes, ING's James Smith, a developed market economist focused on the UK, had already predicted that Reeves would have no fiscal headroom – now she'll miss it by at least another £1.25bn. With the two-child benefit cap also likely to be axed, which will add another £3.5bn to the outgoings side of the balance sheet, not to mention the £17bn cost of boosting defence spending to 3pc, Reeves is more likely to have a sore neck than any headroom. But the Chancellor keeps painting herself into a corner – she has once again recommitted herself to not raising income tax, National Insurance or VAT. She has doubled down on her 'non-negotiable' fiscal rules and respect for the OBR, forcing her to fiddle with the margins every time the bond markets hiccup. We'll have to wait and see what happens with Wednesday's spending review, but something will have to give soon, and it's looking more likely than ever that it will be Reeves.
Forbes
08-05-2025
- Business
- Forbes
Mind The Gap: The U.K.'s New Crypto & Stablecoin Regulations
London, United Kingdom- Mind The Gap Sign: Underground in Central London. Fintech Week in London last week saw U.K Chancellor Rachel Reeves announcing that firms offering cryptoasset services will be subject to new clear rules aimed at boosting investor confidence and driving growth. It is estimated that 12 percent of U.K. adults now own or have owned crypto, up from just four percent in 2021, and the Government is concerned about the risks that cryptoassets present to retail customers, and in particular scams and fraud. Reeves said, 'Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the U.K.' Crypto firms with U.K. customers will also have to meet clear standards on transparency, consumer protection, and operational resilience, just like firms in traditional finance. The long-awaited new rules, published by HM Treasury just before Fintech Week, are being deployed as a Statutory Instrument (SI) under the Financial Services and Markets Act 2023 are currently in draft and open for comments until 23rd May. The new rules were shortly followed by the Financial Conduct Authority's (FCA's) DP25/1: Regulating cryptoasset activities, which is also open for public comment until June 13th. It is expected that industry will put forward strong responses to both given the mixed feedback on the proposals around the virtual water cooler. The Chancellor also announced that the U.K. and U.S. will use the upcoming U.K. – U.S. Financial Regulatory Working Group for crypto and digital assets policy engagement. Industry anticipates a possible collaboration using cross-border industry sandboxes, leveraging the U.K.'s Digital Securities Sandbox. This willingness to drive forward cross-border collaboration was followed by remarks from Bank of England (BoE) Deputy Governor Sarah Breeden who discussed next steps for the U.K. stablecoin regime during a panel session at the Point Zero Forum in Zurich this week where she also re-emphasised the importance of working across borders. The proposed cross-border collaboration, on top of the first and newly announced U.S. trade deal with the U.K. leaves industry players with high expectations of a strong cross border 'special relationship' on key policy and regulation for crypto and digital assets. 'The clarity of purpose in the U.K. government, combined with new rules coming into force for digital assets, will undoubtedly play to strengths in the U.K. economy creating a key opportunity to forge U.S - U.K. regulatory harmonization and investment opportunities,' says Dante Disparte, chief strategy officer and head of global policy and operations at Circle. The SI, is directed at regulating cryptoassets and stablecoins and sets out some key important provisions. The proposals include the creation of a new category of specified investments which will cover qualifying cryptoassets and stablecoins. The also include a new specified activity of stablecoin issuance, and requirements for the authorization for issuers includes a delineation between crypto and traditional securities and the exemption of pure DeFi, further clarifying the U.K.'s regulatory perimeter. While there are some similarities between the proposed U.K regulations to other global regimes such as the E.U.'s MiCA, the pending U.S. Senate Banking's GENIUS Act and Abu Dhabi's already established Fiat Referenced Token Regime, industry policy analysts point out some discrepancies which are a cause for concern for the U.K. from a competition perspective. 'The U.K.'s proposals are a step in the right direction and show clear intent to engage with the stablecoin market thoughtfully,' said Paolo Ardoino, the chief executive officer of Tether, 'recognizing the role of overseas-issued tokens is a sensible move and reflects a more pragmatic approach than what we've seen in the EU under MiCA. 'However, it's important that the U.K. doesn't replicate some of MiCA's flaws which risk stifling innovation and undermining financial stability. We look forward to continued dialogue to help shape a framework that supports both innovation and user protection.' While some are concerned about MiCA's shortcomings, it is notable that MiCA is widely seen as the one of the most comprehensive global frameworks for cryptoassets. The regulatory certainty and legal clarity it brings means that large institutional players have already started to scale there. Jean-Marc Stenger, chief executive officer of Societe Generale – FORGE says, 'Europe has been at the forefront in terms of regulation. The entry into force of the MiCA regime reshapes the market in the E.U. and opens up a window of opportunity. This is the first time that we have a clear, homogeneous, relatively broad, and ambitious framework that is directly applicable throughout the E.U. 'For Societe Generale - FORGE, offering a MiCA-compliant stablecoin is definitely a game-changer. This development is in line with the evolution of the crypto ecosystem itself entering a new dimension in terms of adoption, the increasing institutionalization and growing interest for stablecoins with record volumes. As stablecoins continue to gain ground, we are confident in their capacity to play a central role in the future of finance.' There is a risk that if the U.K. diverges too widely from the E.U., or indeed, from other jurisdictions such as U.A.E. and Singapore, as they introduce their own stablecoin regulatory regime, it will cause operational inefficiencies that make it an unattractive market for global firms to either base themselves or expand into. The growth potential is a key incentive for the U.K. to make a competitive offering as it bids for its piece of the global crypto and digital assets pie. Chainalysis reports that stablecoin market has matured significantly across the world, overtaking BTC, and is a preferred asset for everyday transactions. Driving this growth is stablecoin transactions under $1 million, which they classify as retail (or non-institutional), though it is noted that institutional use of stablecoins is also on the rise. Stablecoins 101: Behind crypto's most popular asset, December 2024 Chainalysis notes that regions like Latin America and Sub-Saharan Africa are embracing USD stablecoins as a hedge against local monetary instability, offering a more reliable means of transacting and preserving value. In these regions, retail adoption of stablecoins is largely driven by their practicality for low-cost remittances, secure savings in regions with volatile currencies, and accessibility to DeFi services like lending and staking. Matthew Osborne, Ripple's U.K. & Europe policy director say, "Thriving crypto hubs like Singapore and the U.A.E shows what's possible when ambition meets urgency. We look forward to the U.K Government and regulators working at pace to get this rulebook live, providing the regulatory clarity that is essential for serious institutional participation in the sector and the U.K.'s continued global leadership in financial services. "We're especially encouraged by the proposed U.K. stablecoin regime, which recognises the global nature of blockchain by allowing overseas-issued tokens, as well as the proposed U.K. – U.S. sandbox. International cooperation like this is critical to scaling the real world benefits of digital asset technology.' Globally, stablecoin legislation has been a priority for many major jurisdictions. The key factors that most firms compare between jurisdictions are the regulatory perimeter, legal classification, who can issue, reserve requirements, who supervises, and KYC/AML requirements. Other important factors considered include disclosure and transparency requirements, reporting frequency, redemption, dispute mechanisms, passporting/reciprocity, requirements for non-local issuers, systemic vs non systemic classification, and cyber and operational resilience. The FCA's Discussion Paper explores these and many other risks, in relation not only to stablecoins but also to in-scope cryptoassets more broadly and proposes ideas and solutions for industry to feed back on. There is a notable willingness to address and accept the realities of cryptoassets and stablecoins as being global in nature, as well as the global structures of the firms issuing and providing services in them. A proposed dual branch / subsidiary model aims to enable cryptoasset trading platforms (CATPs) to pool liquidity at a global level while servicing retail clients from a local, regulated entity. Nevertheless, there remain a number of areas awaiting clarification. The treatment of payment systems using stablecoins remains uncertain, pending updates to the Payment Services Regulations (PSRs) at some as-yet unspecified future date, as do the impacts of issuers of these 'payment stablecoins'. Proposed bans on retail participation in certain activities, or severe restrictions on certain activities, run the risk of isolating the U.K. in its approach and reducing competitiveness. The recent publications are but the beginning of a lengthy and complex process of consultations, feedback and revisions of the proposals, and it will be essential for the U.K. industry ecosystem to participate and feed into this process collaboratively both amongst firms themselves as well as with the regulators if it is to be successful within the short timelines envisaged. Jannah Patchay, a leading industry policy consultant and executive in residence at Global Digital Finance says, 'HM Treasury and the FCA have signalled a clear intent and enthusiasm for engaging in constructive discussion with industry around these proposals, which we very much welcome. There are some crucial design choices being made at this stage of the regulatory framework's development, which will have a significant bearing on the future direction of cryptoasset and stablecoin market development in the U.K. 'It's critical that we work together to get the foundations right for a future regulatory regime that promotes the objectives of consumer protection and market integrity whilst also positioning the U.K. as an attractive, competitive destination - and global hub for innovation!' For the U.K. to be an attractive crypto jurisdiction for stablecoins, both locally issued and those backed by other currencies, it will need to close the gap with other regimes to deliver cooperative agreements with jurisdictions where frameworks already exist, and focus on driving and delivering growth in digital assets. For the U.K. to be an attractive jurisdiction for stablecoins, both locally issued and those backed by other currencies, it will need to close the gap with other regimes and work out cooperative agreements with jurisdictions where frameworks already exist. 'At the end of the day the successful digitization of financial markets depends on global scalability,' says Elise Soucie Watts, executive director of Global Digital Finance, 'Fragmented regulation leads to inefficiencies, duplication, loss of global market potential. "To achieve functional equivalence in these markets jurisdictions need to shift their mindset. Reciprocity isn't charity, it's mutual self-interest and should be part of the growth strategy for any nation that wants to expand its digital markets.' Overall, it is clear from the announcements during U.K. Fintech Week that digital growth is one of the Government's goals. To achieve this, they will need to drive on quickly towards clarity. The SI is one step forward, but now as more detailed proposals come through from the FCA and BoE it is time for continued and detailed industry engagement to both mind - and close - the gap with other regimes to make the U.K an attractive destination for crypto and digital asset growth.
