Payments

Bank of England to be primary regulator of stablecoins

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August 8, 2023

The U.K. government is considering giving the central Bank of England more authority over stablecoins as opposed to the Financial Conduct Authority, the primary financial regulator in the U.K.

In a paper entitled Payments Regulation and the Systemic Perimeter, the government stated the bank would be able to prevent the FCA from taking action on a stablecoin provider, according to a report by Coin Telegraph.

Although the bank and regulator would work together to supervise stablecoins, the Prudential Regulation Authority would be able to keep the FCA from taking action, "if it were to give rise to financial stability concerns."

However, some respondents to the document asked for clarity on how much power the central bank would have over stablecoins.

Last month, Andrew Baily, governor of the Bank of England, said cryptocurrencies and stablecoins don't have settlement finality and should be considered "enhanced digital money" as opposed to traditional fiat currency.

The FCA has also taken a more active role in cryptocurrency regulation, with its recent crackdown on unregistered bitcoin ATMs in the U.K. It claims none of the bitcoin ATMs were registered, and has begun shutting them down.

The U.K. government has also been working on a central bank digital currency, which would automatically settle payments to an online vendor.