Regulators in the U.K. launched consultations detailing their proposals for regulating stablecoins.
The U.K.’s Financial Conduct Authority (FCA) and the Bank of England both issued papers setting out their proposed approach to regulating cryptoassets that are designed to have stable values.
The FCA’s paper proposes a regulatory framework for issuing and holding digital assets that claim to maintain a stable value relative to a fiat currency by holding assets denominated in that currency.
The central bank’s paper focuses on payment systems using stablecoins — given their potential use for retail payments — and the possible risks to financial stability that could arise.
Under its proposals, the Bank of England would also regulate entities that provide services to payments systems, such as stablecoin issuers and wallet providers.
The proposed regulatory approach aims to harness the potential benefits of stablecoins for consumers and retailers by making payments faster and cheaper while ensuring consumer protection, guarding against money laundering, and ensuring financial stability.
“Stablecoins can enhance digital retail payments in the U.K. With this comes the need to make sure there is robust and clear regulation in place,” said Sarah Breeden, deputy governor for financial stability at the Bank of England, in a release.
“Our proposals aim to support safe innovation so that firms can understand the risks they need to manage and ensure that the public can be confident in all forms of digital money and payments.”
The regulators are seeking feedback on their consultations by Feb. 6, 2024.