Bank of England proceeds with plans for systemic stablecoin regime

The Bank of England to Progress with Systemic Stablecoin Regime Following Consultation

The Bank of England is poised to move forward with its proposed systemic stablecoin regime, according to a recent response to a consultation. This development underscores the collaborative oversight role that both the Bank of England and the Financial Conduct Authority will play in governing systemic stablecoins. Stakeholders who participated in the consultation positively received the proposal, and there was a consensus on extending the accountability framework to encompass systemic stablecoins.

The consultation also shed light on the government's endorsement of the reform principle "same risk, same regulatory outcome." Acknowledging the importance of mitigating financial and monetary stability risks associated with stablecoins, the government expressed support for the establishment of limits in this regard.

In the previous year, the U.K. initiated a series of consultations outlining the integration of systemic stablecoins within existing rules and regulations. This approach aimed to ensure the safe return of customer funds and the implementation of measures to facilitate seamless operations, addressing a significant concern within the financial landscape.

The government remains committed to evaluating its strategy in collaboration with national regulators to ensure a coherent and effective framework.

The enactment of the Financial Services and Markets Act 2023 into law in June granted the central bank the authority to institute a systemic stablecoin regime. The bill, introduced in July 2022, has empowered authorities with enhanced control over the financial sector, including the realm of cryptocurrencies. Amendments made during the bill's parliamentary consideration led to the classification of all crypto activities as regulated and the regulation of cryptocurrency advertisements. Additionally, the bill encompasses stablecoins within the scope of payment regulations.

Addressing Cryptocurrency-Related Crime in the U.K.

In a separate development, the U.K.'s National Crime Agency (NCA) is expanding its digital assets investigation team. The agency recently announced its intention to hire four senior investigators for its Complex Financial Crime Team, focusing on crypto-related offenses. The responsibilities of these investigators include probing significant crypto scams, instances of money laundering, and other crypto-based criminal activities carried out by organized crime groups. This move underscores the continued efforts of U.K. authorities to address and combat cryptocurrency-related crimes effectively.