UK Asks Public For Feedback On Proposals For Regulation Of Stablecoins

Updated: 06 November 2023

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The Bank of England (BoE) and the Financial Conduct Authority (FCA) have requested feedback on new proposals to regulate stablecoins.

The proposals are part of a more significant effort to regulate the entire crypto industry. However, given the Bank of England’s concerns that stablecoins hold the potential to disrupt financial stability, it believes that handling this aspect of the crypto sector is of utmost importance.

The BoE said:

Payments systems using stablecoins, if widely used for retail payments in the UK, could pose risks to financial stability.

The FCA and BOE Publish Separate Papers On Stablecoinss

The proposals emerged in two discussion papers issued by the Bank of England and FCA.

The bank’s paper suggests regulating not only operators of systemic payment systems that use stablecoins, but also wallet providers and stablecoin issuers.

The bank’s Deputy Governor for Financial Stability, Sarah Breeden, said that the proposals aim to support safe innovation, allowing firms to understand the risks and learn how to manage them so that the public can confidently and safely use the digital coins.

We have published a Discussion Paper setting out the Bank’s proposed regulatory regime for systemic payment systems using stablecoins and related service providers: https://t.co/xtlbDN4Fqd

Share your views on the regime by Tuesday, 6 February 2024: https://t.co/AiICZomiDn pic.twitter.com/lEkz25EPer

— Bank of England (@bankofengland) November 6, 2023

The paper published by the FCA focuses on proposed regulations regarding issuing and holding stablecoins.

The regulator’s Executive Director of Consumers and Competition, Sheldon Mills, said that stablecoins can make payments cheaper and faster, and the FCA wants to offer companies the ability to utilize this innovation.

He noted that the reason why the FCA and BOE are seeking feedback is so that proportionate rules can be created.

Cross-Authority Roadmap For Stablecoins

Earlier today, the UK’s Prudential Regulatory Authority (PRA) also published a statement that outlined the risks that may arise from deploying multiple forms of digital money, especially when it comes to deposit-takers.

Together with the BoE and FCA, the PRA also rolled out a cross-authority roadmap for stablecoin regulations and broader regulatory regimes for issues of different forms of digital money or money-like instruments.

The nation’s public, as well as industry players, have until February 6 to offer their insights, suggestions, and criticisms for the relevant authorities to consider.

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