The government of the United Kingdom is working together to create rules that will make it possible for stablecoins, cryptocurrencies, and CBDCs to thrive.
The UK might be able to establish rules that permit the coexistence of cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) if the BoE, the FCA, and His Majesty’s Treasury worked together.
In an exclusive interview with Cointelegraph, Varun Paul—a former head of Fintech at the BoE—discussed the UK’s efforts to create legislation that facilitates the use of stablecoins and cryptocurrencies while guaranteeing the safety of investors and preserving financial stability.
According to Paul, who is currently the senior director for CBDCs and financial market infrastructure at Fireblocks, the United Kingdom is getting closer to the most sophisticated regulatory framework in the world—the Markets in Crypto-Assets Regulation (MiCA)—in the European Union.
“The Financial Conduct Authority (FCA) previously said that it would not embrace cryptocurrency and would not regulate it in any manner. The outcome was that the UK lagged behind Europe, but things are looking good,” as Paul points out.
In October 2023, the U.K. Treasury released its final proposal detailing its intentions to regulate the industry. The FCA will be responsible for authorizing firms that provide cryptocurrency-related activities.
Attempts to elevate the United Kingdom to EU parity and foster innovation have recently surfaced in a series of publications, with the goal of elevating London to the status of a global leader in financial technology and cryptocurrency. It’s an acknowledgment that the Financial Conduct Authority, the Treasury, and the Bank of England cannot remain silent on this matter any longer,” Paul explains.
Paul maintains that the United Kingdom would benefit from a coordinated regulatory strategy, despite the fact that the nation has been sluggish in establishing a framework to monitor the wider cryptocurrency ecosystem and the systemic function of stablecoins.
According to the director of Fireblocks CBDC, the development of legislation in the UK has been quicker than in the EU since the United Kingdom does not have to coordinate rules across various states. Regulations that strike a balance between encouraging innovation and maintaining financial stability have also benefited from the complementary approaches of the Treasury, the Bank of England, and the Financial Conduct Authority (FCA):
“The possibility for a more complete set of laws to promote stablecoins, permitting tokenized deposits for banks as well as central bank digital currencies, is enhanced by the collaboration between those three institutions.”
Paul points out that stablecoins and smaller cryptocurrency and Fintech firms in the UK are now regulated under the FCA’s system. The Prudential Regulation Authority and the Bank of England would pay close attention to “bigger, systemically significant” companies.
Also Read: Hungary wants to regulate digital investment instruments with a crypto law March 6, 2024
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