The UK Plans To Adopt Stablecoins For Payments

Planning for the adoption of stable currencies

The UK Treasury announced the response to the consultation yesterday and called for evidence on the approach to regulating stable currencies. In the document, most respondents demanded a separation between stablecoins related to a fiat currency and those referring to other assets.

Speaking of the law, the treasury considers that some tokens already fall within the applicable legal framework and would not require any separate legislation to control them. According to the document:

"The government believes that some forms of digital currency or tokens, such as those intended for wholesale settlement, may already fall within the applicable legal framework in the United Kingdom. However, this also depends on the structure of the symbol and the type of actions involved. "

Regulation is required before approval

Therefore, future legislation will focus on creating a clear framework in the United Kingdom and also on the clarity of the scope of the activities to which the regulatory regime applies. Rather than drafting a completely new regulation.

Following the previous proposal to split between stablecoins supported by fiat currencies and those linked to other assets, the acceptance of stablecoins as a means of payment will adopt the former and not the latter. One likely reason is the lesser danger posed by stable coins connected to fiat coins.

According to the document:

"The government recommends that the rule capture all stable currencies that refer to fiat currencies, including a stable currency in a single currency or a stable currency based on a group of currencies."

This conclusion follows from the idea that stablecoins supported by one or more fiat currencies have the ability to develop into a common payment method.

The decision to adopt stablecoins was not a surprise, given that the cryptocurrencies were approved in a study previously published by the Financial Policy Committee (FCP) of the Bank of England.

The Bank of England will test blockchain distribution technology in the financial markets

Treasury Secretary John Glen representing the Chancellor delivered a keynote address at Innovative Finance Global, the Fintech 2022 Week Submission.

In his speech, he emphasized the chancellor's intention to support the economic recovery and make Britain the world's largest financial center. To achieve the latter, he considers that Fintech plays a very vital role that cannot be ignored.

Speaking of blockchain technology, he said:

"Never in the history of trade has there been an invention as promoted and misunderstood as Distributed Ledger and Blockchain technology."

He also mentioned that technology could be a challenge, but it is also an opportunity.

He also noted that:

"If crypto-technologies are to be a key part of the future, then we - the UK - want to be involved and be that way from the beginning. In fact, if we get involved now — if we act now — we can pave the way. ”

An open-minded approach to the UK

On the government's approach to blockchain technology, John Glen said:

"Because we want this country to be a global hub - the best place in the world to set up and expand crypto-companies. If there's one thing I want to convey here today, it's that the UK is open for business - open for crypto business. "

He expressed his usual concerns about energy consumption when it comes to cryptocurrency mining, saying:

"In terms of the carbon footprint, the UK is a 'green finance hub', it is a world leader… so of course we will look closely at the energy use associated with specific crypto-technologies."

Despite this, the government is ready to understand the potential of blockchain technology, with what Glen called a "detailed plan".

In the coming days, there will be a lot of work to do to incorporate crypto technology into the UK financial system as the authorities set up a crypto hub.