- The U.K. government has published a new consultation report.
- The report provides clarification on the proposed stablecoins regulation.
- BoE and FCA lead as favorite regulators.
The United Kingdom government has accelerated consultations around regulating stablecoins in the country. His Majesty’s Treasury published a new 40-page consultation report on August 7, 2023, hinting at a possible rebalancing of regulatory jurisdiction over stablecoins between the Financial Conduct Authority (FCA) and the Bank of England (BoE).
The Government’s Proposal
In 2022, the U.K. government proposed an amendment to part five of the country’s Banking Act to include an additional “service provider” category and consequently allow the recognition of high-risk payment providers. The amendment was principally similar to the Financial Services and Markets Act 2023 (FSMA 2023), which enabled the recognition of digital settlement assets (stablecoins) as a mode of payment.
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The latest consultation response report has set achievable measures for the legal regulation of what the government terms “systemically important stablecoins.” While the report proposes that the BoE assumes a co-supervision role over stablecoins alongside FCA, respondents want BoE to be given more power to prevent FCA from acting against service providers.
In the consultation report, the Prudential Regulation Authority was also proposed to play watchdog over FCA and prevent the body from undertaking certain actions, especially if they raise irrefutable financial stability concerns.
Respondents Yearn for a Liberal Crypto Industry
As most respondents vouched for BoE’s primacy to regulate stablecoins ahead of FCA, they also wanted clarity on the limitations of this power. The upshot was that regulation shouldn’t be a hindrance but a stepping stone to attaining a liberal crypto market.
The U.S SEC also envisions consultations with crypto investors to gather their input on regulation:
Commissioner Peirce: SEC Should Ask Crypto Investors What Protections They Need
Japan aims to ease the tax burden on crypto holders and promote industry growth:
