The Bank of England and the FCA Seek Feedback on Stablecoin Regulations
The Bank of England (BoE) and the Financial Conduct Authority (FCA) are seeking feedback on new proposals to regulate stablecoins. These proposals are part of a broader effort to regulate the entire crypto industry. The BoE is particularly concerned about the potential for stablecoins to disrupt financial stability.
According to the BoE, if stablecoins are widely used for retail payments in the UK, they could pose risks to financial stability.
The FCA and BOE Publish Separate Papers On Stablecoins
The proposals emerged in two discussion papers issued by the Bank of England and FCA. The bank’s paper suggests regulating not only operators of systemic payment systems that use stablecoins, but also wallet providers and stablecoin issuers.
The bank’s Deputy Governor for Financial Stability, Sarah Breeden, stated that the proposals aim to support safe innovation, allowing firms to understand the risks and learn how to manage them so that the public can confidently and safely use digital coins.
We have published a Discussion Paper setting out the Bank’s proposed regulatory regime for systemic payment systems using stablecoins and related service providers: https://t.co/xtlbDN4Fqd
Share your views on the regime by Tuesday, 6 February 2024: https://t.co/AiICZomiDn pic.twitter.com/lEkz25EPer
— Bank of England (@bankofengland) November 6, 2023
The FCA’s paper focuses on proposed regulations regarding issuing and holding stablecoins. The regulator’s Executive Director of Consumers and Competition, Sheldon Mills, said that stablecoins can make payments cheaper and faster. He noted that seeking feedback is essential for creating proportionate rules.
Cross-Authority Roadmap For Stablecoins
Earlier today, the UK’s Prudential Regulatory Authority (PRA) also published a statement outlining the risks associated with deploying different forms of digital money. Together with the BoE and FCA, the PRA also rolled out a cross-authority roadmap for stablecoin regulations and broader regulatory regimes for different forms of digital money or money-like instruments.
The public and industry players have until February 6 to provide their insights, suggestions, and criticisms for relevant authorities to consider.
Hot Take: Regulating Stablecoins – Striking A Balance Between Innovation And Safety
The proposed regulations by the Bank of England (BoE) and Financial Conduct Authority (FCA) aim to balance innovation with safety in regulating stablecoins. As these digital assets gain popularity, there is a growing need for oversight to ensure financial stability while allowing safe innovation in this sector. Seeking feedback from industry players and the public demonstrates a commitment to creating proportionate rules that address potential risks while enabling firms to leverage stablecoins’ benefits. The cross-authority roadmap further emphasizes collaboration among regulatory bodies in addressing issues related to digital money or money-like instruments.
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