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.
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.
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Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.