Proposals for UK #Stablecoins regulation have been released by the Financial Conduct Authority (FCA) and the Bank of England (BOE). In the future, stablecoins—digital assets with a goal of maintaining a constant value—may be utilised for retail transactions.
The FCA will supervise the issuers of fiat-backed stablecoins, while the BOE will control "systemic stablecoins" that are widely enough in circulation to potentially jeopardise financial stability. If approved, the BOE's proposals would enable businesses to issue fiat-backed, payments-focused stablecoins in the UK. Stablecoins linked to the value of the British pound are the main focus of the BOE's plans because the central bank believes that these will likely be used widely for payments.
The proposed regulatory strategy from the FCA and BOE attempts to preserve financial stability, stop money laundering, and protect consumers.
The Bank of England (BOE) has proposed requiring stablecoin issuers to fully back their coins with deposits; the deposits would not be eligible for interest payments. According to the proposals, there must be safeguards on how sterling stablecoins are held by businesses on behalf of customers, capital requirements to make up for any potential shortfalls, and a full backing of deposits at the BOE for the coins. Consumers would be entitled to quick redemptions at par, but in order to prevent stablecoins from being used in bulk, there would be a holding limit that has not yet been decided upon. In order to allow retail payments for goods and services, the Treasury is also thinking about changing the payments laws.
