UK Treasury Gears Up For Stablecoin Regulation in New Bill

Partly owing to the resignation of the United Kingdom Prime Minister, Boris Johnson, there had been an initial delay in the UK’s plan to implement the framework to regulate stablecoins. Based on the U.K. Treasury’s term, stablecoins are “a form of crypto assets which aim to maintain a stable value relative to other assets.”

Several moves had been made to legalize a few stablecoins, especially after the extraordinary fall of the TerraUSD (UST). There were also plans to create a UK non-fungible token (NFT). The responsibility to accomplish the regulation was left on the shoulders of the U.K. Treasury alongside the Bank of England (BoE), the Payment Systems Regulator (PSR), and the Financial Conduct Authority (FCA).

Now the plans have been revived as the new UK chancellor, Nadhim Zahawi, has laid out the government’s ambitions to regulate stablecoins as part of a new Financial Services and Market Bill (FSMB). The new Financial Services and Markets bill was revealed on Wednesday during a Parliament sitting. Embedded in the bill are guidelines on the safe adoption of digital assets. 

The UK Financial Services and Markets Bill

According to the bill, firms will be permitted to test-run new technologies and practices in the financial market by utilising Financial Markets Infrastructure Sandbox. These sandboxes will be created in line with the outlined guidelines in the FSMB. In return, there will be increased efficiency, transparency and resilience of new products. 

Nadhim Zahawi who was newly installed as Chancellor of the Exchequer of the United Kingdom after Rishi Sunak resigned, declared that according to the bill stablecoin and other ‘digital settlement assets’ would be accepted as a form of payment in the UK. The 335 pages bill contains instructions stating that the BoE, PRA or PSR and FCA would first be informed before any alteration is made. 

Meanwhile, the FSMB is yet to be passed into the UK law. It still has to go through the lawmakers in both the House of Parliament and the House of Lords. Zahawi believes that this bill will help the government deliver on its promise of an open, green, and technologically advanced financial services sector that would be globally competitive.