UK Lawmakers Approve New Stablecoin Rules
UK Lawmakers agree on new rules for stablecoins paving the way for the UK to become a global hub for the crypto industry.
The United Kingdom moved forward on the Financial Services and Markets Bill on Oct. 25 which is currently at committee stage.
The suggested bill proposes “a range of measures to maintain and enhance the U.K.’s position as a global leader in financial services, ensuring the sector continues to deliver for individuals and businesses across the country.”
The bill builds upon existing measures to broaden regulations of stablecoins and mentions “Digital Settlement Assets” (DSA) as a new term, moving away from the use of “crypto assets.” According to the U.K. government, “crypto assets use some form of distributed ledger technology (DLT),” whereas DSA includes stablecoins, “given their potential to develop into a widespread means of payment.”
The government plans to begin with the most stable, least volatile coins likely to be used by intermediaries as a settlement currency. Beyond that, the government will depend on consultation when approving future stablecoins.
Economic Secretary to the Treasury Griffith commented on the UK’s progress in regulating crypto in relation to rival jurisdictions, stating, “we wish to tentatively seize those opportunities…not fall behind other markets, but also proceeded in a cautious way”. This statement comes after the European Union approved the Markets in Crypto-assets Regulation (“MiCA”) earlier this month.
As the MiCA legislation stands now, the size of crypto assets linked to assets other than EU currencies is constrained by a “tough limit,”. The goal of the provisions limiting stablecoins is to protect and encourage the use of euro-denominated stablecoins like e-money.com which currently supports several European currency-backed stablecoins such as the EEUR, the ECHF, and tokens backed by Scandinavian currencies (ENOK, EDKK, and ESEK), rather than the dollar-denominated coins that currently dominate the market.
The UK's recognition of crypto and digital assets as financial instruments is yet to be scribed into law. The bill must pass crucial steps: This bill must be approved at committee stage before it can come before a House of Commons vote. Once approved by the House of Commons. The House of Lords will then be required to approve or amend the bill before final royal approval by the new monarch, King Charles III.
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