UK government leaders appear to be ready to embrace some types of cryptocurrencies. They could soon recognize them as a legitimate form of payment, which, in theory, means that the gambling industry in the country could soon accept certain forms of digital currency.
The UK just announced a new ambition. It wants to become a global crypto-asset technology hub. One step will be to recognize cryptocurrencies as a legitimate alternative to fiat to achieve this.
The UK Treasury is going to begin to regulate stablecoins. This, according to an official government announcement, seems to be more than just a pipe dream. Legislation is being drafted to officially make stablecoins a form of payment. The government hasn’t announced which stablecoins it will approve, and there are plenty from which to choose. The most well-known options are Tether, USD Coin, and DAI.
Stablecoins are cryptocurrencies where the price is designed to be pegged to a cryptocurrency, fiat money, or exchange-traded commodities.
Stablecoins have direct links to fiat currencies. They differ from other digital currencies in that their value, in theory, moves in unison only with the value of their fiat counterpart. As such, stablecoins cannot experience some of the wild fluctuations in value that bitcoin and others experience.
Stablecoins Coming to the UK
The decision isn’t necessarily the government stating that it is time for cryptocurrencies to be recognized globally. It’s a move to propel the UK forward, and the government hopes to turn it into a global cryptocurrency technology hub.
This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation,” states Chancellor of the Exchequer, Rishi Sunak.
As long as the initiative is allowed to proceed, it could also benefit the gambling industry. Transacting with cryptocurrencies is significantly cheaper and faster than using bank transfers or debit and credit cards. Digital currencies also make it easier for businesses to operate globally, eliminating barriers to cross-border payments.
The UK might eventually embrace some other forms of digital currencies. The Treasury confirmed that it would review the possibility later this year but didn’t specify what options might be on the table.
Around 9.8 million Brits hold cryptocurrency, a six-fold increase from 2018. Digital currency and gambling have always had a close relationship, and the UK’s decision could fortify that link.
UK Goes All In On Digital and Blockchain
The announcement that approval of stablecoins could be coming to the UK is substantial. However, the government has other plans, as well. It will reportedly look into adopting distributed ledger technology for its financial markets and develop a financial market infrastructure sandbox.
In addition, a non-fungible token (NFT) is coming this summer. The Treasury and the Royal Mint will collaborate on developing the token, “an emblem of the forward-looking approach the UK is determined to take.” Decentralized finance (DeFi) loans could also officially arrive. These alternatives allow any holder of digital assets to lend those assets to others and earn interest.
The government plans on considering whether it can support DeFi loans by altering the tax rules. If successful, it would mean a more competitive lending environment.
Should the UK implement all of its plans, they would have far-reaching effects extending beyond its borders. Others, such as the US, would need to update their policies to not fall further behind.
The US has limited ties to stablecoins currently but acknowledges that they are present in the financial lending sector. However, it has not officially taken a stance on their use as a form of payment.
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