UK Government Seeks Feedback on New Stablecoin Rules from Public

TLDR

• The UK House of Lords Financial Services Regulation Committee has launched an inquiry into proposed stablecoin rules.
• The inquiry seeks public input on regulatory frameworks proposed by the Bank of England and the Financial Conduct Authority.
• The committee will assess the impact of stablecoins on traditional financial services like banking and payments.
• Written submissions are open until March 11 and oral evidence will be taken during a public hearing.
• The Bank of England plans to prioritize a stablecoin framework and tokenized collateral policies by 2026.

The UK House of Lords Financial Services Regulation Committee has launched an inquiry into the proposed stablecoin rules. The committee seeks public input regarding the regulatory frameworks set by the Bank of England (BoE) and the Financial Conduct Authority (FCA). The inquiry focuses on assessing whether the frameworks provide “measured and proportionate responses” to developments in the stablecoin market.

Committee Seeks Public Input on Stablecoin Rules

Baroness Noakes, the committee’s chair, emphasized the importance of evaluating the regulatory frameworks. She explained that the inquiry would assess how stablecoins could affect traditional financial services like banking and payments. The committee intends to determine the opportunities and risks arising from the increased use of stablecoins in the UK.

The committee invites written submissions from industry participants, experts, and the general public until March 11. Additionally, a public hearing will take place on Wednesday to gather oral evidence on the matter. The inquiry will play a crucial role in shaping the future of stablecoin regulation in the UK.

As the stablecoin market grows, the Bank of England and the Financial Conduct Authority aim to create a balanced regulatory framework. The BoE has announced plans to prioritize the development of a stablecoin framework and tokenized collateral policies by 2026. These efforts are expected to clarify regulations under the UK’s EMIR framework and expand the digital securities sandbox.

The proposed framework allows systemic stablecoin issuers to access Bank of England deposit accounts. The Bank also plans to offer liquidity support as a backstop for these issuers. Sasha Mills, the Executive Director for Financial Market Infrastructure at the BoE, emphasized that these steps would influence the future of digital finance in the UK.

Bank of England Proposes Stablecoin Holding Limits

The proposed stablecoin framework focuses on “systemic stablecoins,” which are fiat-linked stablecoins widely used in UK payments. These stablecoins include pound sterling-denominated tokens used for retail or corporate transactions. As a result, they could pose risks to financial stability, prompting the need for regulation.

The Bank of England has proposed temporary holding limits of £20,000 for individuals and £10 million for businesses. The goal is to mitigate potential risks associated with the growing use of stablecoins in the UK. Full implementation of the new regulatory regime is expected by October 2027, following further consultations and deliberations.

The inquiry into stablecoin rules reflects a broader effort to ensure that the UK remains at the forefront of digital finance regulation.

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