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UK Parliament Nears Landmark Legislation to Regulate Stablecoins

Jun 23, 2023

UK Parliament Takes Aim at Stablecoins: Landmark Legislation Nears Approval

The United Kingdom is on the verge of implementing a regulatory framework for stablecoins, as lawmakers prepare to consider a groundbreaking piece of legislation this Monday, June 26, 2023. The Financial Services and Markets Bill, which aims to introduce comprehensive changes to the regulation of financial services in the country, includes provisions to establish a regime specifically tailored to oversee stablecoins.


Under the proposed legislation, stablecoin providers will be subject to authorisation and supervision by the Financial Conduct Authority (FCA). These institutions must meet stringent capital and governance requirements while ensuring the protection of user funds. Additionally, stablecoins deemed "systemically important" will fall under the supervision of the Bank of England.


Having already undergone its third and final reading in the House of Lords on Monday, June 19, the Financial Services and Markets Bill has now been returned to the House of Commons. On June 26, Members of Parliament will review the amendments made by the Lords. Should these amendments be approved, the bill will be ready to receive the "Royal Assent."

The "Royal Assent" is the final step in the legislative process, marking the moment when the completed bill is presented to the reigning monarch for signing. It is at this juncture that the bill officially becomes an Act of Parliament, cementing it as a new law within the country's statute books.


Typically, a bill is expected to receive Royal Assent within a week or two after gaining final approval from both Houses. However, this timeline is not guaranteed. In the case of the Financial Services and Markets Bill, Royal Assent must be granted before the next State Opening of Parliament, tentatively scheduled for November 2023. Given the widespread approval and support the bill has garnered, it is unlikely that the gap between approval and Royal Assent will be lengthy.


In the event that the House of Commons rejects the Lords' amendments or proposes alternatives, the bill will need to return to the Lords for further deliberation. A tentative date of June 28 has been set aside for this contingency in the House of Lords. This process, often referred to as "parliamentary ping-pong," entails ongoing discussions and negotiations between the two Houses until a consensus is reached.


In conclusion, pending the outcome of the MPs' vote on Monday, June 26, the regulation of stablecoins could soon become enshrined in UK law within a matter of weeks. Interested parties can track the progress of the Financial Services and Markets Bill and related publications on the official UK Parliament website [https://bills.parliament.uk/bills/3326]. As the nation edges closer to a robust regulatory framework for stablecoins, the implications for the financial sector and digital currency ecosystem are poised to be significant.


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