UK Races to Regulate Stablecoins Amid US Competition
The United Kingdom is intensifying its efforts to establish a robust regulatory framework for stablecoins, aiming to catch up with the United States. As the demand for stablecoins grows worldwide, global competition for establishing regulation is heating up, with the US leading after the Genius Act created significant momentum for digital assets.
Bank of England’s Consultation Paper Due November 10
According to Bloomberg, the Bank of England’s Deputy Governor, Sarah Breeden, announced plans to release a consultation paper about stablecoin regulations on November 10. Breeden emphasized that the UK’s regulatory guidelines will be ready “as quickly as the US,” dismissing concerns the UK may be lagging behind. The framework is projected to be operational by the end of next year, aiming to meet the growing demand for clarity in digital asset regulations.
Focus on Systemic Stablecoins
Under the new proposal, systemic stablecoins—which are expected to play a significant role in payment systems—will fall under the Bank of England’s oversight. Meanwhile, less impactful stablecoins will be supervised by the Financial Conduct Authority (FCA) under a more relaxed regime. The UK government has also hinted at plans to cap transaction limits temporarily to safeguard its financial market stability.
Collaboration with the US and Global Interest
The regulation discussion in the UK has been closely aligned with developments in the US. Breeden revealed that UK regulators have been actively collaborating with the US Federal Reserve and finance ministries. This collaboration aims to ensure both countries’ approaches remain consistent in addressing the risks and opportunities associated with stablecoins.
Elsewhere, Canada has also been making strides in regulating fiat-backed stablecoins, requiring issuers to maintain reserves and adopt data protection strategies. With the global ecosystem moving toward balancing stability with innovation, the UK’s progress is a significant step forward.
Leveraging Blockchain to Modernize Financial Markets
Alongside stablecoin regulations, the UK government has announced new initiatives to modernize financial markets. One proposed plan involves appointing a “digital markets champion” to drive adoption of blockchain technologies. Additionally, the UK’s recent lifting of a ban on crypto exchange-traded notes (ETNs) could broaden market access, extending availability beyond professional investors.
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