The House of Lords in the UK has launched an official investigation into stablecoin legislation when the Bank of England and the Financial Conduct Authority are getting closer to finalising new crypto regulations.
The assessment will look at how stablecoins might affect regular banking, payment systems and overall financial stability.
Legislators will also evaluate whether the suggested regulations effectively balance between promotion of innovation and control of possible hazards. The deadline for public and industry participants to give feedbacks is March 11.
As indicated by the Bank of England, stablecoin monitoring will be a major priority in 2026.
Regulators are working with the FCA on a framework for so-called “systemic stablecoins” – digital currencies extensively used for payments that could pose greater threats to the financial system if left uncontrolled.
The plan would need systemic stablecoins to be fully supported, with the central bank holding a sizable amount of reserves. The BoE is also thinking about providing issuers with liquidity support.
Increased use of stablecoins has alarmed regulators since it may lower bank deposits and have an impact on lending to the real economy.
The investigation takes place while the FCA develops more comprehensive regulations for the cryptocurrency industry, which are anticipated to be fully implemented by 2027.
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