The UK Government Proposes Regulations for Fiat-Backed Stablecoins
The UK government has released its plans for regulating fiat-backed stablecoins, such as Tether (USDT), in the country. Crypto companies that wish to offer services with overseas stablecoins in the UK will need permission from the Financial Conduct Authority (FCA). Authorized persons will be allowed to issue fiat-backed stablecoins in or from the UK, while overseas stablecoins can also be used for goods and services, but brokers and payment providers must still be authorized by the FCA.
The proposed legislation grants the FCA the authority to govern the issuance and custody of fiat-backed stablecoins originating from or issued in the UK. However, stablecoins not backed by fiat can still be used in payment chains without regulation.
The legislation is expected to be introduced by early 2024, pending parliamentary time. In October 2023, the FCA warned crypto firms about complying with new rules on financial promotions for crypto assets and identified over 220 breaches since then.
Hot Take: The UK Government Takes Steps to Regulate Stablecoins
The UK government’s move to propose regulations for fiat-backed stablecoins demonstrates its commitment to ensuring a safe and regulated crypto environment. By requiring authorization from the FCA, the government aims to protect investors and promote transparency within the industry. This step also indicates a growing recognition of cryptocurrencies as a legitimate form of payment and highlights their potential for use in everyday transactions. While there may be concerns about stifling innovation with regulations, it is essential to strike a balance between fostering innovation and safeguarding against risks. Overall, this development marks a significant milestone in the UK’s crypto journey and sets a precedent for other countries to follow suit in regulating stablecoins.
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