U.K. Government Gears Up for Wholesale Settlement With Stablecoins

The attempt to create a trajectory between stablecoins and Central Bank Digital Currencies (CBDC) is fast gaining traction in the crypto ecosystems, amongst regulators, and with top banks in many regions.

Member of Parliament and HM Treasury Economic Secretary Andrew Griffith who claims to be fully committed to the crypto sector has reiterated the United Kingdom’s stance on the use of stablecoin for wholesale settlements.

According to Griffith, the U.K. government is in full support of such stablecoin settlements between banks. Furthermore, this shows the U.K.’s commitment to attaining the status of a global crypto hub in the long run not deterred by the recent happenings in the industry. Moving forward, the introduction of a whole stablecoin, as well as the Financial Markets Infrastructure (FMI) sandbox, are the next for the region.

“I want to see us establish a regime, and this is within the FSMB (Financial Services and Markets Bill) for the wholesale use for payment purposes of stablecoins,” Griffith announced. 

Notably, this wholesale stablecoin will not be issued by the U.K. government but by a third party, the MP added. Also, the Ministry of Finance is hatching plans to launch a public consultation into the potential of a CBDC, the Digital Pound.

After the introduction of the FSMB Bill which will likely be rolled out before Easter, some new payment apps will be licensed and introduced to the market.

Will CBDC Phase Out Stablecoin Use?

While it is believed that the wholesale stablecoin may lead to a likely adoption of a CBDC, Griffith cited that;

“The consultation is going to say this is an if and not a when. We are not fully into the inevitability of doing this,” unlike stablecoins which are “here now.” If a British CBDC is eventually introduced, Griffith says it would be an anonymized and intermediated platform by design.

Last year, Antoine Martin, a financial stability advisor at the Federal Reserve Bank of New York explained that stablecoin may be a shortcut to adopting CBDC for many regions. 

“Instead of issuing a retail [central bank digital currency], central banks could support stablecoins by allowing them to be backed one-for-one with balances in a central bank account.”