The UK Treasury’s Updated Proposals for a Regulatory Regime for Systemic Stablecoins
The UK Treasury has released a consultation response outlining updated proposals for a regulatory regime for systemic stablecoins. The aim is to ensure the stability of financial systems and oversee conduct in the crypto industry. Here are the key points:
1. Co-supervision arrangements: The Bank of England (BoE) will lead on prudential matters, while the Financial Conduct Authority (FCA) will oversee conduct. Other relevant bodies, such as the BoE’s Prudential Regulation Authority and Payment Systems Regulator, will also be involved.
2. Extension of approach: The consultation proposes extending the intended approach towards the co-supervision of systemically important digital settlement assets, systemic stablecoins, as previously proposed in the government’s 2022 stablecoins consultation response document.
3. Defined roles: Regulators are expected to clearly define their collaborative efforts in a memorandum, outlining the distinct roles each body plays in the regulatory framework.
4. Power given to BoE: The BoE will have the power to prevent the FCA from taking action against entities recognized as systemic if it raises concerns about financial stability.
The UK has recently passed the Financial Services and Markets Act 2023, granting the BoE the authority to establish a systemic stablecoin regime. The BoE plans to release its rules on systemic stablecoins later in 2023.
Hot Take
The UK Treasury’s updated proposals for a regulatory regime for systemic stablecoins demonstrate a collaborative approach to ensure the stability and oversight of the crypto industry. By clearly defining roles and granting power to the Bank of England, the aim is to prevent potential risks to financial stability. This proactive stance from the UK government sets a precedent for other countries to follow in regulating the increasingly important crypto market.
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