The Bank of England recently unveiled draft regulations that aim to integrate stablecoins, digital assets, into the UK’s payment ecosystem. This initiative represents a major step in the adoption of cryptocurrencies in the country.
A comprehensive regulatory framework for Stablecoins
As the adoption of stablecoins attracts more and more attention, the Bank of England has shown determination by implementing substantial measures to regulate this sector.
In close collaboration with the Financial Conduct Authority (FCA), the BoE (Bank of England) presented a detailed plan to supervise the stablecoin market in the UK. This initiative is in line with the UK government’s recent proposal to implement these regulations from early 2024.
This plan is not limited to regulation alone. Indeed, it also includes the integration of stablecoins as a means of payment in the UK!
The detailed approach of the Bank of England’s regulatory plan
According to the plan unveiled on Monday November 6, the Bank of England go to will focus specifically on stablecoins backed by the pound sterling (GBP) in line with the Prudential Regulation Authority (PRA).
This assessment estimates that contagion risks will be lower for stablecoins used within systemic payment systems regulated by the Bank than for e-money or other stablecoins governed by the FCA.
At the same time, the FCA which is currently cooperating with Singapore and other nations on cryptocurrency regulation, will be responsible for overseeing the entire crypto market in the UK.
The document provides that issuers will be able to retain profits generated by interest and returns on collateral assets. In addition, stablecoin issuers will obtain prior authorization before issuing these assets in or from England.
The move is part of the UK’s wider vision, driven by Prime Minister Rishi Sunak, to make the country a crypto hub by putting in place clear rules for digital assets and crypto businesses.
Is London, a key European financial center, now keen to position itself as one of the world’s crypto leaders?
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.