The Bank of England, along with the FCA (Financial Conduct Authority), recently issued a statement planning to jack up the regulation of stablecoins that pose a significant threat to the financial system within the country.
As of today, November 6, the FCA published a discussion paper containing noteworthy details for the drafting of the upcoming regulations revolving around stablecoins. In addition to this, the FCA stated that the regulations concerning fiat-backed stablecoins will also be introduced sometime around the beginning of next year.
FCA Providing Aid To Bank of England
According to reports, the Bank of England proclaimed that it is setting its sights on regulating stablecoins by overseeing systematic stablecoins and their issuers. Moreover, the Bank of England mandated the FCA to crack down on the regulation of stablecoin providers within the crypto sector.
The aforementioned decision comes in alignment with the United Kingdom’s aim to introduce a proper legislation framework for fiat-backed stablecoins by the beginning of the next year.
Furthermore, the FCA also plans to introduce a new regulatory measure for fiat-backed stablecoins that are pegged to traditional currencies, such as the USD or euro, by next year.
Bank of England Facilitates Stablecoin Regulation
As stated by the Bank of England, stablecoins pose significant risks to financial stability as they grow more popular among consumers. Furthermore, the bank aims to bring out specific regulations revolving around these risks, emphasizing certain critical requirements for stablecoin issuers. Following the discussion, the FCA now plans to mandate Stablecoin issuers to provide clarity around the assets that back their tokens.
Additionally, the Bank of England is exploring various strategies to regulate stablecoins. These approaches encompass imposing minimum capital prerequisites for stablecoin providers, conducting stress tests on stablecoin systems, and implementing limitations on the assets sanctioned to support stablecoin tokens.
With the release of the FCA and the Bank of England’s recent discussion paper, cryptocurrency enthusiasts within the U.K. are keenly eyeing stablecoins along with the broader market associated with it, awaiting results that may have a colossal impact on the crypto market.
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