European Markets Org Praises Bank of England On UK Stablecoin Rules

Crypto Regulation stablecoin regulations UK
Last updated:
Freelance Journalist
Freelance Journalist
Andrew Throuvalas
About Author

Andrew is a journalist and content writer with a passion for Bitcoin. His work has been featured with Cryptonews, Decrypt, CryptoPotato, and Bitcoin Magazine, among others.

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Today, the Bank of England extended the deadline for citizens to provide feedback on its proposed regulatory regime for UK stablecoins from February 6 to February 12.

The central bank’s discussion paper focused on rules for sterling-denominated stablecoins, which it believes are the most likely cryptocurrencies to be adopted for payments nationwide.

The Proposed UK Stablecoin Rules

Priorities include ensuring the “singleness” of money by maintaining the constant convertibility of stablecoins and regulating firms governing blockchains on which payments stablecoins are used.

It also accompanied a separate discussion paper from the Financial Conduct Authority (FCA) examining stablecoin use cases and auditing/ reporting requirements for stablecoin issuers and custodians.

Many stakeholders and experts have already issued responses to the regulatory frameworks, including the Association for Financial Markets in Europe (AFME). James Kemp – the AFME’s managing director of technology and operations – said it was a “positive step,” highlighting the FCA’s insistence that existing laws already cover securities tokens.

“Security tokens are inherently securities and should be treated as such throughout their lifecycle,” Kemp told Cointelegraph. “To preserve market functioning, it is important that they are not subject to the separate regulatory treatment and territorial scope for custody proposed by the FCA.”

What Should Back Stablecoins?

British crypto advocacy group CryptoUK also said the recommendations are “generally appropriate,” but recommended that the FCA adopt rules already used in other regions to avoid “jurisdictional fragmentation.”

They also suggested that more assets be made eligible collateral for backing stablecoins beyond U.S. government debt and short-term cash deposits.

“A higher degree of flexibility in backing assets will increase diversification and reduce the risks facing issuers and by extension the risks that consumers face by investing into this sector,” the group argued.

Tether USD (USDT), the world’s leading stablecoin, primarily backs its 100 billion tokens using cash and US debt. It also includes multi-billion dollar allocations to gold and Bitcoin (BTC) in its reserves.

Stablecoin regulations are expected to take effect in the U.K. in 2025.

On U.S. shores, stablecoin legislation is still a tricky issue for both major political parties to agree on. On Tuesday, Treasury Secretary Janet Yellen told Congress that new legislation for stablecoins and non-security cryptos would be necessary to fill enforcement gaps for regulatory agencies like the CFTC and SEC.

More Articles

Opinions
Opinion: Crypto Has a Trust Problem—Here’s How We Can Fix It
Mona El Isa
Mona El Isa
2025-02-16 18:08:06
Features
Coinbase Just Made Huge Predictions on Crypto’s Future
Connor Sephton
Connor Sephton
2025-02-16 18:03:15
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors