Britain will reveal crypto regulation plans in coming weeks, sources say

Britain’s Chancellor of the Exchequer Rishi Sunak leaves the 11 Downing Street, in London, on March 23, 2022.

According to four industry sources, the U.K. government will soon reveal plans to regulate the cryptocurrencies market.

Sources told CNBC that British Finance Minister Rishi Sunak is expected to make an announcement in the coming weeks about a new regulatory regime forCryptocurrencies.

When asked about the plans by CNBC, the Treasury wouldn't comment.

Sources who spoke to CNBC said that the plans are likely to be favorable to the industry, providing legal clarity for a sector that has been mostly lacking in regulation.

According to the sources, Treasury officials have shown a willingness to understand the complexity of the digital assets that derive their value from the U.S. dollar.

A number of firms and trade groups have been in discussions with the department. One of the sources said that includes the Winklevoss brothers. The Gemini dollar is pegged to the U.S. dollar.

Over the past few years, Stablecoins have seen exponential growth in usage, in tandem with rising interest in Cryptocurrencies more broadly. The total circulating supply of tether is now more than 80 billion dollars, up from $4 billion two years ago.

Regulators worry that those token may not be fully backed by an equivalent amount of reserves and are being used for money laundering and other activities.

Regulators are worried about the possible exposure of the financial system to digital currencies, as well as their potential use for evading sanctions imposed on Russia.

The Bank of England called on policymakers to expand their regulatory frameworks to limit the risks posed by the digital currency.

In a letter to several bank CEOs, the deputy governor said there had been increased interest from banks and investment firms.

The Treasury's move is being seen as a response to President Joe Biden's executive order calling for coordination from different U.S. federal agencies. The lack of similar action from the U.K. has been lamented by several industry insiders.

If they fail to make it onto the Financial Conduct Authority's register in time, a number of companies could be forced to shut down their U.K. operations.

The high number of businesses that aren't meeting the required anti-money laundering standards is a problem. There are just 33 companies on the register. Firms assessed by the regulator have either withdrawn their applications or been rejected.