UK mulls granting Bank of England more power in stablecoin regulation

The consultation paper explains that the BOE could take on “prudential matters,” and the FCA could head up conduct

article-image

UK Prime Minister Rishi Sunak | ComposedPix/Shutterstock modified by Blockworks

share

The UK Treasury penned a consultation paper on stablecoins, outlining how it’s considering approaching stablecoin regulation.

The government is considering tapping the Bank of England to oversee stablecoins alongside the Financial Conduct Authority (FCA). The consultation paper comes after the government sought feedback from respondents — including PayPal, HSBC UK, Circle and Barclays.  

The Treasury found that the Banking Act of 2009 gives the BOE enough of a regulatory perimeter to oversee stablecoins, though it noted that it will “further clarify the Bank’s existing regulatory toolkit.”

“A clear majority agreed with the government’s principles to reforming this perimeter to ensure that the Bank’s capacity to mitigate acute financial stability risks kept pace with the evolution of the payments sector at large,” the UK government said.

The paper lays out the groundwork for what could be expected of the BOE if it’s put in charge of stablecoins. The Bank would take point on “prudential matters,” while the FCA would head up conduct. 

However, “the Bank would be given the power to prevent the FCA from taking action in relation to an entity recognised as systemic” and the Prudential Regulation Authority could step in if any FCA actions caused concern around financial stability.

According to the paper, the government will push the BOE to supply details on how it will regulate newer technologies, though it also notes that the power shouldn’t then be applied to entities that are already supervised by the bank. 

“The government also recognises that limits might be set to mitigate broader financial stability risks, such as the financial and monetary stability risks posed by new forms of digital money such as stablecoins,” the paper said.

The Bank of England has been conducting stablecoin and distributed ledger technology research, with the BOE finding that stablecoins offer “efficiency” in payments earlier this year.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit