Finally, the Financial Conduct Authority is to have powers to regulate cryptoassets. The difficulty is that globally there is not set definition to what a cryptoasset is. That said, it looks like the UK is setting itself up to be a cryptoassets centre.
Under the Financial Services and Markets Bill 2022 a cryptoasset is defined as any cryptographically secured digital representation of value or contractual rights that:
The proposed laws relating to crypto are currently ‘out for consultation’ with interested party submissions to be sent by April 2023 with the Bill expected to receive Royal Assent and become law later this year. The legislation will also incorporate fiat-backed stablecoins.
What is a Fiat Currency?
Fiat money is a type of currency that is declared legal tender by a government but has no intrinsic or fixed value and is not backed by any tangible asset, such as gold or silver.
What Are Fiat-Pegged Stablecoins?
Fiat backed stable coins are known as “pegged cryptocurrencies.” This is a coin, token or asset issued on a blockchain that is not backed by hard assets such as gold or silver but is linked to a government or bank-issued currency. The pegged cryptocurrency has a specific cash value in reserves. For example, sterling used to be linked to the Gold Standard i.e., the Bank of England held enough gold to cover the total value of £1 ‘promissory notes’ issued. £ sterling left the Gold standard in 1931 during the Great Recession and the $ dollar left the Gold Standard to be underwritten by the US government in 1971. Actions like this took place to issue more notes than countries had in gold reserves to promote liquidity and stimulate economies.
Cryptocurrency is fast becoming the ‘norm’ and we welcome the British Government’s move to target the UK to be the number 1 home to crypto trading and regulation. Britcoin is on its way and will present huge opportunities to offer secure and faster encrypted transactions. Imagine the speed and security to buy a house via blockchain technology with the complete history of that property’s transactions encoded in the blockchain currency unit.