- The UK is finalizing its plan for crypto regulation.
- In the upcoming regime, three institutions will oversee fiat-backed stablecoins.
- Overseas stablecoins will be permitted under certain conditions.
The United Kingdom (UK) government is fast-tracking its plan to facilitate and regulate the use of fiat-backed stablecoins in the country’s payment chains.
On October 30, the government published its final proposals for regulating the nascent crypto ecosystem, stating that the legislation for fiat-backed crypto assets regulation could be introduced in the UK as early as next year.
Notably, the government has proposed three agencies to implement the plan.
Three Agencies to Regulate Stablecoins
According to the government’s document, the anticipated legislation will bring fiat-backed stablecoins under the purview of the Financial Conduct Authority (FCA), Payment Systems Regulator (PSR), and Bank of England.
Together, the three institutions will be mandated to create and adopt a regulatory framework that is “coherent” to minimize the risks of regulatory overlaps for firms. Through coordination, the three agencies will also be charged with minimizing the potential for customer harm and financial stability risks arising from regulated stablecoins.
“The use of fiat-backed stablecoins in payment chains will be regulated through amendments to the Payment Services Regulations 2017 (PSRs 2017), which provide for the regulation of authorized or registered payment institutions (PIs) and set the conditions for providing payment services,” the document read.
Notably, the document noted that the government would “accommodate” fiat-backed stablecoins not issued in or from the UK to be used as payments for goods and services in the real economy.
UK Charging to Become a Crypto Hub
The move by the government to allow other fiat-backed stablecoins to operate in the UK echoes the country’s commitment to turn the jurisdiction into a global crypto hub.
Per the document, the government and FCA will consult widely with industry players to enact secondary legislation that will permit the use of non-regulated stablecoins safely.
This will be made possible by exploring the workability of an approach where the entity facilitating merchants to receive payments in overseas stablecoins is authorized by the FCA and is responsible for ensuring that the stablecoins used in the payment chain are up to par with the regulator’s standards for use in payments.
Read how the FCA resisted the political push to open up the UK market to crypto:
FCA Resisted Political Push to Open UK Crypto Market Access
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