The U.K. Treasury has released a consultation paper in order to gather information from stakeholders on how to approach cryptocurrencies and stablecoins to create a regulatory framework.
The consultation solicits opinions on how the U.K. can equip its regulatory framework to make sure they “harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability.” They also aim to incorporate advice from the Cryptoassets Task Force.
The Treasury says that, with a large proportion of crypto assets outside regulatory oversight, they may pose a risk to consumers and lack financial safeguards.
In this regard, according to researcher Flipside Crypto, less than 2% of anonymous accounts that can be tracked on Bitcoin’s digital ledger control 95% of the available supply.
At the same time, according to the cryptocurrency data firm Chainalysis, of the existing 18.5 million Bitcoin, around 20 percent (USD$140 billion), appear to be in lost or otherwise stranded wallets.
Also, a survey conducted in 2020 by Fidelity Investments found that 36% of institutional respondents held crypto in their portfolios and that more than six out of 10 expressed interest in Bitcoin and other cryptocurrencies.
This new consultation in the U.K. will be focused on the roles of crypto assets and stablecoins in payments and investment, as well as the use of blockchain or distributed ledger technology in financial markets. It will also look at additional regulatory actions that might be required in the space.