Hassan Maishera
TL;DR
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The UK government plans to start regulating stablecoins by next year.
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Non-fiat-backed stablecoins will not be added to the regulated payment chains.
Stablecoin Regulation Could Commence In The UK By 2024
The United Kingdom government published on October 30 an update to its plans to regulate fiat-backed stablecoins. The document highlights how the government intends to regulate the use of fiat-backed stablecoins in U.K. payment chains.
Per the document, His Majesty’s Treasury wants to introduce specific legislation to parliament by next year. If this happens, the Financial Conduct Authority (FCA) will be in charge of regulating stablecoins.
The regulation would see the Treasury make local companies arrangers of payment authorized by the FCA. The FCA will also ensure that stablecoin issuers outside the UK meet the local standards before providing services in the country.
Furthermore, the Treasury is proposing that non-fiat-backed stablecoins will not be added to the regulated payment chains. The document proposes that the transactions with non-fiat-backed stablecoins remain unregulated but doesn’t include a ban.
The FCA will be granted the authority to demand stablecoins issuers to hold all the reserve funds in a statutory trust. The regulatory agency will also set the terms of the trust and will include the redemption obligations in the case of the firm’s failure.
The UK government has been working on regulating the cryptocurrency sector in the country. The Financial Services and Markets Act, which will serve as the central framework for all kinds of crypto, was passed in the House of Lords, the U.K. parliament’s upper chamber, earlier this year.
