The U.K. could see digital asset regulation in the next 12 months as part of a push to turn the nation into a hub for digital assets, said Economic Secretary to the Treasury, Andrew Griffith, to CNBC on Monday.

See related article: G7 nations set to push for stricter cryptocurrency regulations at Japan summit in May

Fast facts

  • The government will work with the Financial Conduct Authority (FCA) to establish a regulatory framework for digital assets that will combine existing financial asset laws and new rules specific to digital assets.
  • The FCA has already begun regulating crypto-related firms under its existing powers, but Griffith said more needed to be done.
  • He highlighted the Financial Services and Markets Bill, currently going through Parliament, as an example of upcoming legislation that had some provisions on crypto. 
  • The bill, which covers stablecoins, will come into force before the broader crypto regulatory framework.
  • The U.K. Treasury will release a consultation paper on cryptocurrencies and stablecoins in the coming months, focusing on the risks and benefits of these assets, including their potential for illicit activities such as money laundering and terrorist financing.
  • The U.K. government hopes to strike a balance between protecting consumers and promoting innovation in the crypto industry, with the move towards crypto regulation in line with similar developments in other countries such as Dubai, Singapore and Japan.

See related article: Bank of England says stablecoins need limits on use to prevent financial instability