Sunday, July 14, 2024

UK Extends Stablecoin Regulation Consultation Period, Seeks Inclusive Feedback

The Bank of England and the Financial Conduct Authority have extended the feedback deadline for stablecoin regulation to February 12, aiming for a comprehensive, inclusive regulatory framework.

The Bank of England (BOE) and the Financial Conduct Authority (FCA) have indeed extended the comment period for their stablecoin regulation discussions in the UK, with the new deadline set for February 12. This extension is aimed at gathering more comprehensive feedback to help construct a more inclusive regulatory framework for crypto-assets in the UK. The decision to extend the comment period reflects the UK’s commitment to creating a regulatory environment that is both meticulous and inclusive, taking into account the complexities of the evolving crypto market​​​​.

The BOE’s discussion paper focuses on the implications of introducing sterling-backed, retail-focused stablecoins into the UK’s payment systems, covering topics such as transfer functions, wallet provider requirements, and the overall goal of maintaining financial system stability and security. On the other hand, the FCA’s discussion paper explores a broader range of stablecoin use cases beyond payment systems, including aspects like auditing, reporting, prudential requirements, backing, and custodianship, emphasizing a regulatory approach where traditional financial services and crypto-assets facing similar risks are governed by comparable standards​​.

The Association for Financial Markets in Europe (AFME) submitted its comments on time, praising the UK’s regulatory proposals as a positive development but also calling for consistency in the regulatory treatment of securities tokens. AFME advises a cautious approach regarding the application of the proposed regulations to stablecoins issued overseas, suggesting waiting until international frameworks and markets are more mature​​​​.

This initiative by the BOE and FCA, along with the industry feedback from organizations like AFME, showcases the UK’s strategic and balanced approach towards crafting a regulatory environment for stablecoins and crypto-assets. It aims to balance innovation with regulation, ensuring a secure, efficient, and innovation-friendly ecosystem for the development of crypto-assets, while also considering the importance of global coordination and the establishment of a level playing field internationally​​​​​​.

Image source: Shutterstock

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