EXCLUSIVE: Are UK Regulators Now Firmly Behind Stablecoins?
Despite Philip Hammond, former Chancellor of the Exchequer from, 2016 to 2019, believing the UK were falling behind other jurisdictions in the regulatory management of crypto, July has been a positively active month for crypto regulation in the UK.
Stablecoins have received a massive boost in their part to play for the financial ecosystem. In a speech made by the recently appointed Chancellor of the Exchequer, Nadhim Zahawi, unveiled the new Financial Services and Markets Bill (FSMB), which brings stablecoins into the remit of the UK regulator as they may be used as a form of payment. This is a bold forestep as it suggests that the UK is pursuing a leading role in fintech with such a bill.
Key Features Of The Bill (Viewable In Full Here):
- Implement the outcomes of the Future Regulatory Framework (FRF) Review
- Maintain the UK’s position as an open and global financial hub
- Harness the opportunities of innovative technologies in financial services
- Bolster the competitiveness of UK markets and promote the effective use of capital
- Support the levelling up agenda, promote financial inclusion and consumer protection
- Extend the Banking Act of 2009 and Financial Services (Banking Reform) Act of 2013 to cover “digital settlement assets” (DSAs)
The Wider Importance – It’s clear that the features of the bill reflect a desire for the UK to contend within the crypto industry with the focus on DSAs and “innovative technologies in financial services” – after all, could crypto be any more innovative from its offset?
The bill also comes as a response to Western regulators struggling with the opportunities and challenges presented by digital tokens pegged to reserve currencies such as the U.S. dollar.
When it comes to DSAs, HM Treasury’s regulatory oversight has been expanded as they now have the power to impose rules of the regulation, payment systems and service providers dealing with stablecoins.
Furthermore, Financial Markets Infrastructure (FMI) sandboxes have also been created for firms to experiment with new technologies within a regulated environment to fully understand the reality of the crypto and blockchain-based capital market products they are creating. This is a great assistance to those looking to make a statement in the space.
Although the Treasury must consult with the Financial Conduct Authority, the Bank of England and other regulatory bodies before changes are made, it’s important to not see this as a negative. Why? Ultimately, the crypto industry has been crying out for further regulation for a significant amount of time now, and this extension of frameworks only strengthens the cohesion between regulatory bodies which in turn will make outlines clearer.
The First Fully-Backed GBP Stablecoin – All of this news arrived following a monumental moment in the UK’s history with digital assets, as blackfridge, the Isle of Man-based fintech company, has launched poundtoken, the first British-regulated stablecoin fully backed 1:1 by pound sterling (GBP). poundtoken, known by the ticker “GBPT”, allows direct GBP access to digital asset markets and facilitates frictionless real-time settlements.
“Following the boom in decentralised finance, stablecoins have become an integral part of the crypto sector,” commented Nicholas Maybin, COO of poundtoken. “Many are aware that the crypto market can be unpredictable, so when trading a stablecoin it’s vital to know that you will always be able to take out what you put in. In addition to robust regulation we’re excited to have KPMG auditing poundtoken in this new exciting time to crypto and hope to bring further reassurance to those involved in the space.”
The future of stablecoins within the UK’s financial sector seems to be filled with opportunity and prosperity given the moves that the UK government is making. In my opinion, the next phase of the UK’s global fintech hub is well and truly being built.
Is there still a long way to go though? If the UK wants to compete with the powerful crypto hubs developed in other regions, such as LATAM, of course. However, it is most definitely a step in the right direction in furthering financial opportunity and diversifying the way finance is conducted.
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