The Bank of England (BOE) and the Financial Conduct Authority
(FCA) have released a proposal to oversee the issuance and operation of
stablecoins in the United Kingdom. These plans followed the recent unveiling of
broader cryptocurrency regulations by the UK government.
Stablecoins, which could potentially disrupt
financial stability due to their wide circulation, will come under the regulatory
purview of the BOE, according to the official statement published by the HM
Treasury. Concurrently, the FCA will supervise the broader cryptocurrency
sector, aligning it with the UK’s ambitions to
become a global crypto hub.
The catalyst for these proposals includes the
intentions of major tech companies such as Meta (formerly Facebook) and PayPal
to issue stablecoins tailored for facilitating payments. Notably, the collapse
of Terraform Labs, a prominent stablecoin entity from the previous year,
spurred increased global attention toward the need for stablecoin regulations,
Coindesk reported.
The BOE’s proposal offers a distinct approach by
allowing companies to issue payments-focused, fiat-backed stablecoins in the
UK, provided they meet the necessary approval criteria. This development marks
the UK’s commitment to establish itself as a crypto-friendly jurisdiction.
Regulators are keen to gather feedback from
stakeholders before proceeding with the final rules. The BOE and FCA intend to
consult on these rules by mid-2024 and aim to implement the stablecoin
