UK rule makers set out roadmap for regulating stablecoins

finextra.com:

The UK Treasury Treasury is currently considering making changes to the payments legislation to enable retail payments for goods and services to be made using fiat-backed stablecoins. This includes an option the Treasury are exploring to allow certain stablecoins which are issued outside of the UK to be used for payments.

The FCA’s Discussion Paper explores the proposed regulation around the issuance and custody of fiat-backed stablecoins under the Financial Services and Markets Act 2000 and the use of these stablecoins as a means of payments under the Payment Services Regulations.

Sheldon Mills, executive director, consumers and competition, FCA, says: “Stablecoins have the potential to make payments faster and cheaper for all, and that’s why we want to offer firms the ability to utilise this innovation safely and securely.

Getting views from others is essential for creating proportionate rules that benefit consumers and firms and also meet our objectives."

The Bank’s Discussion Paper outlines how the Bank of England would regulate operators of systemic payment systems using stablecoins - payments systems which, if widely used for retail payments in the UK, could otherwise pose risks to financial stability. The Bank would also regulate other entities providing services to these payment systems, such as stablecoin issuers and wallet providers, where they could otherwise pose financial stability risks.

Sarah Breeden, deputy governor for financial stability, Bank of England, comments: “Stablecoins can enhance digital retail payments in the UK.

With this comes the need to make sure there is robust and clear regulation in place. Our proposals aim to support safe innovation so that firms can understand the risks they need