UK's Central Bank Forges Ahead With Plans for a Systemic Stablecoin Regime

The U.K. recently passed the Financial Services and Markets Act 2023 into law, which gave the BoE powers to set up a systemic stablecoin regime.

AccessTimeIconAug 8, 2023 at 9:11 a.m. UTC
Updated Aug 9, 2023 at 1:22 p.m. UTC
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The Bank of England (BoE) intends to proceed with its plans for a systemic stablecoin regime, according to a response to a consultation published on Monday.

Systemic stablecoins are cryptocurrencies pegged to the value of other assets that are in wide enough circulation to potentially disturb broader financial stability, should they fail. Respondents welcomed the central bank's plans for these types of stablecoins to be supervised by both the BoE and Financial Conduct Authority (FCA), with relevant rules to be set by the bank.

Respondents and the government also supported extending existing financial markets infrastructure regime (FMI SAR) to cases of insolvency concerning systemic stablecoins, along with accountability measures (which evaluates whether the regulators' approach is future proof).

The U.K. released a series of consultations last year detailing that systemic stablecoins would be brought under existing regulations to ensure the return of customer funds and make sure company operations continue – something several respondents expressed concern about.

"Few others noted concerns that adding a new objective for returning customer funds to all systemically important payments entities may lead to situations where this was prioritized over ensuring continuity of service to mitigate acute stability risks," the document said. The government said that it will continue to work with regulators to review its approach.

The U.K. recently passed the Financial Services and Markets Act 2023 into law which gave the BoE powers to set up a regulatory regime for systemic stablecoins. The BoE has said it plans to publish its rules later this year.

UPDATE (Aug. 8, 11:05 UTC): Adds BoE systemic stablecoin rules are coming this year to last line.

Edited by Parikshit Mishra and Sandali Handagama.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

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