Casey Wagner

<div id="highlights-block_624b07f6e2bb3" class="highlights">
 <ul>
 <li>The UK plans on being a leader in stablecoin regulation, a new report says</li>
 <li>Legislation will be introduced in Parliament when possible, the finance ministry said</li>
 </ul>
 
</div>



The United Kingdom’s finance ministry intends to prioritize regulating stablecoins that are used as means of payment.



In a report released Monday, the ministry said it will be releasing further regulatory guidelines this year in order to protect consumers while fostering innovation around digital assets.



“This response document confirms the government’s intention to take the necessary legislative steps to bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory perimeter, primarily by amending existing electronic money and payments legislation,” the <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1066166/O-S_Stablecoins_consultation_response.pdf" target="_blank" rel="noreferrer noopener">report</a> read. 



Stablecoins are expected to become a “widespread means of payment” in the near future, the ministry predicts.&nbsp;



The report, which investors and industry leaders have been anticipating since late March, highlights the ministry’s desire to be at the forefront of stablecoin regulation.



US lawmakers have been debating how to approach the growing stablecoin industry in recent months as well, most notably <a href="https://cms.blockworks.co/democratic-rep-stablecoin-issuers-dont-have-to-be-banks-with-100-reserves/" target="_blank" rel="noreferrer noopener">floating the proposal</a> that stablecoin issuers would have to be a registered and insured bank.



The UK is also considering implementing a regulatory framework around stablecoins that mirrors the existing guidelines around banks. Stablecoin reserves in particular are a main concern for the ministry, which suggests in the report that “stablecoins would be backed by central bank liabilities, deposits at commercial banks, or in high quality liquid assets respectively.”&nbsp;



In terms of accepting stablecoins as a means of payment, the report notes that the Electronic Money Regulations 2011 and Payment Service Regulations 2017 provide ample guidelines that can be easily applied to new digital asset technology.&nbsp;



“The government considers that an amended e-money framework can deliver a consistent framework to regulate stablecoin issuance and the provision of wallets and custody services,” the report read.



<blockquote class="wp-block-quote">“Establishing a regulatory environment for stablecoins used as payment simultaneously creates a basis to enable market entry to support innovation, while ensuring that appropriate regulatory standards apply for the benefit of customers, market integrity and stability.” </blockquote>



The report focuses on how the government can safely and quickly bring stablecoin technology to consumers and interested parties.



“For consumers, bringing stablecoins into the regulatory framework means they will be able to use stablecoin services with confidence,” the report read



The government plans to introduce legislation to Parliament when possible, the report noted. A specific timeline was not given.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

UK Aims To Let Consumers ‘Use Stablecoin Services With Confidence’

Ben Strack

<div id="highlights-block_61e6ee4b93e84" class="highlights">
 <ul>
 <li>The UK’s Advertising Standards Authority censured Arsenal Football Club last month for promoting tokens to fans without proper warnings</li>
 <li>The government’s plan follows similar efforts by agencies in Spain and Singapore</li>
 </ul>
 
</div>



The UK government shared plans to bolster its rules on crypto advertisements in an effort to protect consumers from misleading claims.&nbsp;



The plans call for bringing the advertising of cryptoassets under the rules of the Financial Conduct Authority (FCA) — the same standards that stocks, shares, and insurance products are held to, the UK government <a href="https://www.gov.uk/government/news/government-to-strengthen-rules-on-misleading-cryptocurrency-adverts" target="_blank" rel="noreferrer noopener">revealed Tuesday</a>.



The UK launched its Cryptoasset Taskforce in 2018, and Rishi Sunak, Chancellor of the Exchequer, said in a statement that the government is eager to support innovation in the crypto space.



“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest, but it’s important that consumers are not being sold products with misleading claims,” Sunak added. “We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.”



The number of consumers in the UK holding cryptocurrency was estimated to be 2.3 million, according to <a href="https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021" target="_blank" rel="noreferrer noopener">an FCA report</a> published in June.



Though the Advertising Standards Authority (ASA) has been trying to respond to the complaints about misleading crypto promotions, the agency needed support from the FCA given the scale of the problem, according to ​​Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown. The ASA could only censure firms after the ads had been posted, she added.



The <a href="https://www.asa.org.uk/rulings/arsenal-football-club-plc-a21-1121873-arsenal-football-club-plc.html" target="_blank" rel="noreferrer noopener">ASA censured Arsenal Football Club</a> last month for promoting tokens to fans without proper warnings. The watchdog told the organization to ensure its future ads “did not trivialise investment in crypotassets” and make “sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated.”



The UK rule changes will come through legislation to amend the Financial Promotion Order, which sets out the investments and activities to which the financial promotion regime applies, according to the government’s announcement.



<blockquote class="wp-block-quote">“Once this new legislation is passed, firms promoting crypto products will have a much higher bar to jump to show that ads are fair, clear and not misleading and companies could face hefty fines for serious breaches,” Streeter explained in an email. </blockquote>



The UK government’s plans follow <a href="https://www.cnmv.es/portal/verDoc.axd?t=%7B1cbaf61c-57c2-4830-bd6a-071f806795e2%7D" target="_blank" rel="noreferrer noopener">rules outlined by Spain’s national securities market commission</a> on Monday. The agency establishes that the advertising of cryptoassets must include “clear, balanced, fair and non-misleading content and information on the risks in a prominent manner,” among other measures.



The Monetary Authority of Singapore (MAS) also <a href="https://cms.blockworks.co/singapore-issues-guidelines-targetting-crypto-promotions-to-general-public/" target="_blank" rel="noreferrer noopener">released guidelines Monday</a> urging that digital payment tokens providers should not downplay the risks of crypto trading. Regulated providers, including banks and financial institutions, are now barred from promoting their crypto services to the public through any means except through their own websites, social media accounts or mobile applications.



In the US, <a href="https://cms.blockworks.co/voyager-estimated-quarterly-revenue-doubles-despite-lawsuit/" target="_blank" rel="noreferrer noopener">a complaint filed against Voyager Digital</a> last month alleges that the firm is “targeting unsophisticated investors with false and misleading promises of reaping large profits in the cryptocurrency market.” A Voyager spokesperson called the action “absolutely spurious and without any merit.”



“The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra cheap money,” Streeter said. “As speculation swirls about how rapidly central banks will tighten mass bond buying programmes and start raising interest rates, given soaring inflation, they are likely to stay volatile.”



The price of bitcoin was about 41,600, as of 11:30 a.m. ET, according to CoinGecko — down nearly 40% from its all-time high of more than $68,000 in November. 




<div class="tradingview-widget-container">
 <div class="tradingview-widget-container__widget"></div>
 <div class="tradingview-widget-copyright"><a href="https://www.tradingview.com/symbols/BTCUSD/?exchange=INDEX" rel="noopener" target="_blank">BTCUSD Rates</a> by TradingView</div>
 <script type="text/javascript" src="https://s3.tradingview.com/external-embedding/embed-widget-mini-symbol-overview.js" async>
 {
 "symbol": "INDEX:BTCUSD",
 "width": "100%",
 "height": "100%",
 "locale": "en",
 "dateRange": "12M",
 "colorTheme": "light",
 "trendLineColor": "rgba(41, 98, 255, 1)",
 "underLineColor": "rgba(41, 98, 255, 0.3)",
 "underLineBottomColor": "rgba(41, 98, 255, 0)",
 "isTransparent": false,
 "autosize": true,
 "largeChartUrl": ""
}
 </script>
</div>




<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

UK Government Seeks to Boost Regulation of Crypto Ads

Macauley Peterson

<div id="highlights-block_61bb6de2d796b" class="highlights">
 <ul>
 <li>The Bank of England raised interest rate by 15 basis points to 0.25%, in a near unanimous vote</li>
 <li>The European Central Bank leaves rates unchanged, but will taper its government bond purchases</li>
 </ul>
 
</div>



The Bank of England’s monetary policy committee (MPC), decided on Thursday to raise its Bank Rate to 0.25%, according to <a href="https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2021/december-2021" target="_blank" rel="noreferrer noopener">the committee’s minutes</a>, in a bid to dampen inflation. The 12-month CPI rate jumped from 5.1% in November, up from 3.1% in September, and the highest level since September 2011. The Committee voted by an eight to one margin in favor of the rate hike.



The move comes a day after the US Federal Reserve’s analogous group left rates unchanged but also <a href="https://cms.blockworks.co/fed-gets-hawkish-doubles-taper-signals-three-rate-hikes-in-2022/" target="_blank" rel="noreferrer noopener">moved to tighten monetary policy</a> by decelerating its asset purchase program more quickly than earlier planned.



Like the Fed, the Bank of England (BoE) policymakers expect that upward pressure on CPI inflation is driven primarily by supply disruption and should dissipate over time, returning closer to the committee’s long-term 2% target rate.



The MPC notes that the Omicron Covid-19 variant is spreading rapidly in the UK, but it’s medium-term economic effects remain unclear, while inflation has risen faster than anticipated.&nbsp;



The International Monetary Fund (IMF) UK staff weighed in with <a href="https://www.imf.org/en/News/Articles/2021/12/14/united-kingdom-staff-concluding-statement-of-the-2021-article-iv-mission" target="_blank" rel="noreferrer noopener">a policy statement</a>, Tuesday, targeted squarely at the BoE, warning against “inaction bias, in view of costs associated with containing second-round impacts.”



Unemployment in the UK is expected to be 4% in November, down 0.5%, indicating the labor market remains tight.



<h3>ECB calls for “flexibility”</h3>



In the Eurozone, inflation surged to 4.9% in November, the highest level ever recorded, <a href="https://ec.europa.eu/eurostat/documents/2995521/11563387/2-30112021-AP-EN.pdf" target="_blank" rel="noreferrer noopener">according to Eurostat</a>.



At Thursday’s <a href="https://www.ecb.europa.eu/press/pressconf/2021/html/ecb.is211216~9abaace28e.en.html" target="_blank" rel="noreferrer noopener">European Central Bank (ECB) policy meeting</a> in Frankfurt, Germany, ECB President Christine Lagarde announced a scaling back of asset purchases under the pandemic emergency purchase program (PEPP), and its full discontinuance in March 2022.



<blockquote class="wp-block-quote">“We judge that the progress on economic recovery and towards our medium-term inflation target permits a step-by-step reduction in the pace of our asset purchases over the coming quarters. But monetary accommodation is still needed for inflation to stabilise at our two per cent inflation target over the medium term,” Lagarde said in her prepared remarks.</blockquote>



<hr class="wp-block-separator"/>



<div align="center"><iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/Ra6S1O6ZMb0?start=346" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe></div>



<hr class="wp-block-separator"/>



The key ECB interest rates were left unchanged. Similar to the Fed’s policy, the ECB plans to wind down net asset purchases prior to raising rates.



Eurozone inflation is expected to remain elevated next year, but to decline over the course of the year, mirroring the outlook in both the UK and the US.



The US dollar weakened following the BoE and ECB announcements. The DXY, an index representing the USD against a basket of major foreign currencies, fell almost 0.5% in the two hours following the policy updates, but recovered by midday in New York.




<div class="tradingview-widget-container">
 <div class="tradingview-widget-container__widget"></div>
 <script type="text/javascript" src="https://s3.tradingview.com/external-embedding/embed-widget-market-overview.js" async="">
 {
 "colorTheme": "light",
 "dateRange": "1D",
 "showChart": true,
 "locale": "en",
 "largeChartUrl": "",
 "isTransparent": false,
 "showSymbolLogo": true,
 "showFloatingTooltip": false,
 "width": "400",
 "height": "300",
 "plotLineColorGrowing": "rgba(41, 98, 255, 1)",
 "plotLineColorFalling": "rgba(41, 98, 255, 1)",
 "gridLineColor": "rgba(42, 46, 57, 0)",
 "scaleFontColor": "rgba(120, 123, 134, 1)",
 "belowLineFillColorGrowing": "rgba(41, 98, 255, 0.12)",
 "belowLineFillColorFalling": "rgba(41, 98, 255, 0.12)",
 "belowLineFillColorGrowingBottom": "rgba(41, 98, 255, 0)",
 "belowLineFillColorFallingBottom": "rgba(41, 98, 255, 0)",
 "symbolActiveColor": "rgba(41, 98, 255, 0.12)",
 "tabs": [
 {
 "title": "Indices",
 "symbols": [
 {
 "s": "CAPITALCOM:DXY",
 "d": "US dollar index"
 }
 ],
 "originalTitle": "Indices"
 }
 ]
}
 </script>
</div>




<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
<hr class="wp-block-separator">

The ECB and Bank of England Grapple With Inflation

Sam Reynolds

<div id="highlights-block_6192e466f8324" class="highlights">
 <ul>
 <li>The relatively decentralized federalist system in the USA, which grants significant autonomy to the states, provides an inherently competitive system for market development, which in turn accelerates the adoption of crypto</li>
 <li>Compared to the US, inflation is much more tame in the UK, a macro factor which also inhibits the adoption of crypto</li>
 </ul>
 
</div>



Digital Asset Summit 2021, London — The UK is in the education phase of crypto adoption, where people are beginning to think of it as a legitimate asset class, but the structure of the nation’s government is holding back ambitious crypto entrepreneurs, panelists said during an event at Blockworks’ Digital Asset Summit in London. 



During a fireside chat between Peter McCormack, <a href="https://cms.blockworks.co/podcasts/what-bitcoin-did/" target="_blank" rel="noreferrer noopener">host of What Bitcoin Did</a>, and Oliver von Landsberg-Sadie, CEO of BCB Group, the two discussed how the US’ style of federalism and differences in macroeconomic factors is creating a gulf in crypto adoption between the two countries. 



“With the US federal system, states such as Wyoming, Florida and Texas have seen this as an opportunity to bring business into their states,” McCormack said, pointing out that many firms have migrated to these states. But, in the UK, the Bank of England’s position, according to McCormack, is that bitcoin is a “potential systemic risk.”



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="600" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg" alt="" class="wp-image-11215" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=600 600w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_2640.jpg?w=80 80w" sizes="(max-width: 600px) 100vw, 600px" /><figcaption>Peter McCormack; Source: Ian Walton for Blockworks</figcaption></figure></div>



Brexit is also a weight on the industry in the UK, as banks need to focus on becoming re-licensed and compliant with EU rules and regulations. That’s a burden and inefficient, said the panelists, and also a missed opportunity argued McCormack, who would prefer to see the UK adopt crypto-friendly rules, to be a “leading beacon” for the world.



<blockquote class="wp-block-quote">“We are really behind the US here in ambition, investment, and education,” he said. “On every single measure we are behind, and it’s really depressing to see it,&#8221; said McCormack.</blockquote>



<h3>Macro differences driving adoption</h3>



BCB Group’s von Landsberg-Sadie pointed out that the differences in monetary policies between the US and UK, where money had been printed “far more freely”, is also accelerating crypto adoption on the western side of the Atlantic that doesn’t exist in the same way within the UK.&nbsp;



“The UK has been a little more steady handed in that space, as has the EU,” he said, arguing that if inflation jumps from 3.2% to 6.2% there will be significantly more capital accumulation in bitcoin.



<blockquote class="wp-block-quote">“The retail adoption of crypto in the US is an appropriate response to inflationary concerns.”</blockquote>



But that’s not to say there’s not a “massive appetite for non-US dollar crypto products,” von Landsberg-Sadie said.&nbsp;



As Bloomberg analyst <a href="https://cms.blockworks.co/bloomberg-analyst-bitcoin-is-a-dollar-complement/" target="_blank" rel="noreferrer noopener">Mike McGlone wrote in an April note</a>, crypto enhances the dollar’s dominance in the world because the vast majority of stablecoins are dollar-denominated.



However, to get to that point in the UK and Europe, there still needs to be a “massive catch-up”, von Landsberg-Sadie said.



There’s no lack of factors to drive change, however, as von Landsberg-Sadie explained that the next major capital event will be when there’s a UK-approved treasury management system that allows for the “super juicy returns from DeFi” to be brought into the TradFi world on corporate treasury balance sheets. 



But perhaps that is only possible if the UK can catch up in crypto adoption first.



<hr class="wp-block-separator"/>



Get the day’s top crypto news and insights delivered to your inbox every evening. <a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a> now.



<hr class="wp-block-separator"/>