While America waits (very very patiently) for their stablecoin bill, the UK has put together a proposal for regulating stablecoins and bringing them into the “real economy” as an alternative payment option for goods and services.
As outlined by the proposal, stablecoins would be regulated under existing traditional finance rules, and the Bank of England would supervise issuers.
The BoE itself has set out its criteria for supervision.
BUT, as the FT so eloquently points out, no existing stablecoin would meet their criteria. At the moment, stablecoins are mainly used for crypto payments, not in the average day-to-day.
Issuers falling outside of the BoE’s remit (so, currently, everyone) would have to appoint “payment system operators” that would assess risks and make sure there are appropriate controls. Issuers would also have to fully back stablecoins with deposits in the BoE, and said stablecoins would only be in denominations of pounds sterling.
Unbacked cryptocurrencies, unsurprisingly, were deemed “unsuitable for payments.”
It’s a step. And to be honest, it’s an encouraging one, where regulators are actually thinking about introducing stablecoins, in some form, into the real world.
The rules aren’t set to be finalized until 2025, but at least the proposals are some insight into the government’s long-term thinking.
UK sets out proposals to bring stablecoins into real economy
Bank of England and FCA criteria are latest step in Britain’s drive to position itself as key hub for digital assets
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