UK Extends Stablecoin Regulation Consultation Period, Seeks Inclusive Feedback

The Bank of England and the Financial Conduct Authority have extended the deadline for feedback on stablecoin regulation to February 12, aiming for a comprehensive, inclusive regulatory framework.

The Bank of England (BOE) and Financial Conduct Authority (FCA) have indeed extended the comment period for their UK stablecoin regulation discussions, with the new deadline set for February 12. This extension aims to gather more comprehensive feedback to help build a more comprehensive regulatory framework for crypto-assets in the UK. The decision to extend the comment period reflects the UK’s commitment to creating a regulatory environment that is both rigorous and inclusive, taking into account the complexities of the evolving crypto market.​​​​

The BOE discussion paper focuses on the implications of introducing sterling-backed, retail-focused stablecoins into UK payment systems, covering topics such as transfer functions, wallet provider requirements and the overall aim of maintaining the stability and security of the financial system. On the other hand, the FCA’s discussion paper explores a wider range of use cases for stablecoins outside of payment systems, including aspects such as auditing, reporting, prudential requirements, support and custody, emphasizing a regulatory approach where traditional financial services and crypto-assets face similar risks are governed by comparable standards.

The Association for Financial Markets in Europe (AFME) delivered its timely comments, praising the UK’s regulatory proposals as a positive development, but also calling for consistency in the regulatory treatment of securities tokens. AFME recommends a cautious approach regarding the application of the proposed regulations to stablecoins issued abroad, suggesting to wait until international frameworks and markets are more mature.

This initiative by the BOE and the FCA, together with industry feedback from organizations such as AFME, demonstrates the UK’s strategic and balanced approach to creating a regulatory environment for stablecoins and crypto-assets. It aims to balance innovation with regulation, ensuring a secure, efficient and innovation-friendly ecosystem for developing cryptoassets, while recognizing the importance of global coordination and creating an international level playing field.​​​​

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