UK updates plans for systemic stablecoin regime

Quick Take

  • The UK Treasury released a consultation response on systemic stablecoins.
  • Details include a co-supervisory framework under the Bank of England and the Financial Conduct Authority.

The UK Treasury released a consultation response, updating proposals for a regulatory regime for systemic stablecoins.

The framework released Tuesday agreed on co-supervision arrangements, with the Bank of England leading on prudential matters, ensuring the stability of financial systems. The Financial Conduct Authority would oversee conduct.

Other relevant bodies like the BoE's Prudential Regulation Authority and Payment Systems Regulator would also be involved in the collaborative approach.

"The consultation proposes extending the intended approach towards the co-supervision of systemically important digital settlement assets, systemic stablecoins, as the government had separately proposed in its 2022 stablecoins consultation response document," the Treasury said in the response.

Collaborative efforts

According to the document, regulators should clearly define their collaborative efforts in a memorandum, detailing the distinct roles each body plays in the regulatory framework. The BoE would be given power to prevent the FCA from taking action against entities recognized as systemic, "if it were to give rise to financial stability concerns."

The UK recently passed the Financial Services and Markets Act 2023 into law which gave the BoE powers to set up a systemic stablecoin regime. The BoE has said it plans to publish its rules on systemic stablecoins later in 2023.

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