The Treasury has announced that it will regulate some cryptocurrencies as part of a bigger drive to make the UK a hub for digital payment companies.
“Stablecoins” are projected to become acceptable payment methods, providing users more confidence in using digital currencies.
Stablecoins are digital currencies that are linked to traditional assets or currencies, such as gold.
They’re supposed to be less volatile than Bitcoin and other cryptocurrencies.
The Treasury also announced that a consultation on regulating a much broader range of digital currencies would be held later this year, but did not specify which ones.
The company has been chastised for its business practices, and in 2021, the US Commodities Futures Trading Commission fined it $41 million for allegedly understating its reserves.
Regulators have cautioned that the value of some digital currencies has wildly changed, posing a threat. Large financial institutions are investing in them, so they are becoming more mainstream.
Regulators are hurrying to draught legislation to oversee cryptocurrencies, fearing that their rising popularity may put traditional financial institutions at risk.
According to the Bank of England’s deputy governor in December, while digital assets account for only about 0.1 per cent of UK wealth, the number is rapidly growing.
A sharp collapse in the value of cryptocurrencies, according to Sir Jon Cunliffe, might have a cascade effect.
Meanwhile, the US is drafting legislation in response to mounting worries that the bitcoin industry is becoming a haven for criminals.
Mining, which entails employing enormous clusters of powerful computers to create a digital currency, is also quite energy-intensive. Bitcoin currently emits carbon emissions comparable to Greece, according to new research.
Mr Glen admitted that there were issues with the environment and claimed that the government “would be closely looking at energy usage associated with various crypto-technologies.”