UK Implements New Regulations for Overseas Stablecoins
The United Kingdom has introduced new regulations that will allow authorized financial firms to collaborate with overseas stablecoins. The regulatory framework will be overseen by the Bank of England, the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR). The main goal of these regulations is to minimize potential risks and ensure customer protection.
Regulations for Fiat-Backed Stablecoins
The new regulations will primarily focus on fiat-backed stablecoins used for payments. They will govern the usage of these stablecoins in payment chains and regulate their issuing and custody, regardless of their intended purposes. The UK government is exploring options to accommodate overseas stablecoins for UK payments, with a proposed approach where authorized FCA arrangers of payments ensure that these stablecoins meet FCA standards for use in UK payment chains.
Regulations for Payment Services
The Payment Systems Regulator 2017 will be amended to regulate payment services involving fiat-backed stablecoins. This will specifically target authorized or registered payment institutions. Firms involved in issuance and custody activities related to UK-issued fiat-backed stablecoins will be subject to FCA rules and guidance.
FCA’s Further Regulations for UK Stablecoins
The FCA also plans to regulate the issuing and custody of UK-issued fiat-backed stablecoins for use in UK payment systems. However, stablecoins used on cryptocurrency exchanges will not be covered until phase 2 of cryptoasset regulation. Other types of stablecoins not backed by fiat will still be allowed in payments but won’t be regulated. The FCA is also considering disclosure rules to inform consumers about unregulated crypto assets used in payments.
Expansion of Regulations under the Right of Abode
The UK Stablecoins Regulation also outlines plans to expand regulations to cover the issuance and custody of UK-issued fiat-backed stablecoins under the Right of Abode. This means that the custody of fiat-backed stablecoins and security tokens will be regulated as a new activity, with future plans to include more crypto assets in phase 2.
Hot Take: UK Opens Doors for Collaboration with Overseas Stablecoins
The United Kingdom’s new regulations allowing authorized financial firms to work with overseas stablecoins are a significant step towards embracing digital currencies. By implementing these regulations, the UK aims to foster innovation in the fintech sector while ensuring the safety and protection of customers. The focus on minimizing risks and regulating payment services involving stablecoins demonstrates the government’s commitment to creating a secure environment for digital transactions. With plans for further regulations and expansion in the future, the UK is positioning itself as a leading jurisdiction for stablecoin adoption and regulation.
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