The Chancellor, Rishi Sunak, set out plans yesterday (9 November) for the post-Brexit future of UK financial services. Amongst a number of green finance initiatives and key comments on a future equivalence regime were plans to harness the potential benefits of stablecoins.
Regulators around the globe have been considering their response to the regulation of stablecoins as the emergence and proliferation of stablecoins (such as Facebook’s Libra coin) continues as a key global trend in the evolution of payment systems. Whilst the FCA has provided specific regulatory guidance on the application of the UK regulatory framework to stablecoins, at an international level the Financial Stability Board (FSB) recently published its report (12 October 2020) setting out recommendations on how to promote coordinate and effective regulation, supervision and oversight of Global Stablecoin (GSC) arrangements.
Whilst acknowledging that no existing operational stablecoins have currently reached global scale or present risks to financial stability, the FSB indicated that effective regulation and supervision of GSC arrangements is seen as a key step in the ongoing work to cross-border payments faster, cheaper, more transparent and more inclusive.
Addressing the issue of regulation, Sunak told MPs that the Government will propose a regulatory approach for relevant stablecoin initiatives that ensures they meet the same minimum standards we expect of other payment methods, whilst managing risks to consumers and financial stability. This willingness to acknowledge and support new technologies such as stablecoins is consistent with the UK's innovation-friendly approach and ongoing commitment to promote the UK as a leading global center for FinTech.
Extending the UK’s leadership in financial technology The UK has long been a pioneer in financial services and will remain at the forefront of technological innovation. New technologies such as stablecoins – privately-issued digital currencies – could transform the way people store and exchange their money, making payments cheaper and faster. To harness the potential benefits of stablecoins, whilst managing risks to consumers and financial stability, the Government will propose a regulatory approach for relevant stablecoin initiatives that ensures they meet the same minimum standards we expect of other payment methods.