FCA, BOE, To Regulate UK Stablecoins
The Bank of England and the Financial Conduct Authority (FCA) have announced plans to increase regulation of stablecoins, which pose a significant threat to the UK’s financial system.
The FCA published a discussion paper detailing the drafting of regulations related to stablecoins and fiat-backed stablecoins, with the aim of introducing them around the beginning of next year.
The Bank of England plans to oversee systematic stablecoins and their issuers, and mandate the FCA to crack down on stablecoin providers within the crypto sector.
This decision aligns with the UK’s aim to introduce a proper legislation framework for fiat-backed stablecoins by the start of next year.
The FCA also plans to introduce a new regulatory measure for fiat-backed stablecoins pegged to traditional currencies by next year.
The Bank of England aims to establish specific regulations addressing the risks of stablecoins and mandates stablecoin issuers to provide clarity about the assets backing their tokens.
The Bank of England is exploring various strategies to regulate stablecoins, including imposing minimum capital requirements, conducting stress tests on stablecoin systems, and implementing limitations on assets supporting stablecoin tokens.
(With inputs from Shikha Singh)
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