UK Government turns its Web3 vision into reality

The UK Government is demonstrating strong political leadership on digital assets and taking concrete steps to turn its vision into a reality.  

This week, the Financial Services and Markets Bill received Royal Assent, completing its passage through Parliament. This crucial piece of legislation gives powers to the Government to make rules on the future regulatory framework for crypto assets, establishes a regulatory framework for stablecoins, and introduces a broader competitiveness objective for the UK regulators. This is another critical step in the journey to regulating the sector, and for delivering legal and regulatory certainty to the market.

The Government’s recent consultation on the regulatory framework is thoughtful and considered, with the guiding principle of ‘same risk, same regulatory outcome’. This means the UK will map crypto assets onto existing financial services regulation, then make changes to tailor the rules to the specificities of digital assets. Coinbase responded to the UK’s consultation, setting out critical issues for consideration around issuance and disclosure, custody and the regulatory treatment of staking.  

A regulatory framework for stablecoins could revolutionise financial services, and deliver faster and cheaper payments. We applaud the Bank of England and HM Treasury for their recent consultation on the digital pound. Our response expresses strong support for their vision of delivering the digital pound as a public-private partnership. As the public sector provides a payment infrastructure that is open for use by all, the private sector can build and innovate on top of it to make financial services better for everyone. This creates a huge opportunity for innovation. Stablecoins are the entry point for Web3 and DeFi, and the UK must now focus on developing a flourishing stablecoin market. 

Yesterday, the Law Commission of England and Wales published its final recommendations to the UK Government on recognising digital property rights and creating a crypto collateral regime, similar to that available for traditional financial instruments. These recommendations have been recognised globally as a huge step forward for legal certainty on crypto for consumers and institutional players. 

Separately, the bi-partisan Parliamentary Group on Crypto Assets, led by Dr. Lisa Cameron, earlier this month released its own report calling for a “whole of Government approach” to digital assets, and a “Crypto Tsar.”  We agree that a cross Governmental embrace of blockchain and crypto is needed to onshore innovation, and create a bigger, fairer and more digital economy. The Department for Science Innovation and Technology (DSIT) has a critical role to play here. We also strongly support the report’s recommendation to bring crypto within the financial services regulatory perimeter. 

Crypto assets are more than a financial innovation; they have the potential to transform every part of the economy, including education, health, business, environment, supply chains, and more. The next phase of the internet, Web3, will create a more decentralised, community-governed, and token-driven version of the internet. Crypto assets have transformative potential across all Government departments and sectors of society. 

Coinbase is committed to the UK, where we have a significant presence, reflecting its importance as our largest international market. Recent developments show that the UK is positioning itself to be at the forefront of a new wave of technological transformation towards Web3.