[NEWS] UK government announces it will propose stablecoin regulation bill early next year

The UK government updated its plans for the stablecoin bill on the 30th, announcing that it will be overseen by the FCA (Financial Conduct Authority) and the Bank of England. The UK government will publish and introduce the stablecoin bill as early as next year.

According to the 21-page document, the stablecoin bill will allow the FCA to oversee certain activities related to fiat-backed stablecoins.

The FCA plans to set out requirements for the backing assets of stablecoin issuances, redemption rights, capital requirements, etc. in the regulation. The regulation will require stablecoins to be held in a statutory trust.

The document adds that payments will be covered, including payments related to the purchase of services and goods in retail payments in stores and online. It does not include peer-to-peer stablecoin transfers, where payment services that support or facilitate the transfer are not commercially available, as are peer-to-peer fiat currency transfers.

It also notes that this does not include the purchase of stablecoins backed by fiat currencies, as these are already regulated by the Payment Services Regulations 2017 (PSR 2017).

On the other hand, the central bank plans to oversee services covered by the Digital Services Act (DSA) to regulate stablecoins.

The UK Treasury stated that under the plan, FCA-authorized stablecoin companies should be deemed systemically compliant by the Treasury and be supervised by the central bank, but the government should act as the main regulator and exercise appropriate control, and at the same time, they should be regulated by the FCA.

The UK lawmakers have already passed the Financial Services and Markets Act 2023 in June, which has already been approved. The bill clarifies that crypto assets will be subject to regulation as financial products, and stablecoins are subject to payment regulation.

The act gives regulators the power to regulate the financial system, including the digital asset industry. The bill, approved by the House of Lords, would allow regulators, including the FCA, the Bank of England and the Payment Systems Regulator, to introduce new rules in the digital assets sector.

Andrew Griffiths, economic secretary at the UK Treasury, said that since the UK is no longer part of the European Union, "the new bill allows us to tailor financial services regulation to the UK market."

He said of the proposal, "We will continue to work with the industry to realise our vision of the UK being a global hub for cryptocurrency technology."

Source:Announcement
Image: Shutterstock