Photo courtesy: Jernej Furman via Flickr (Source here)

UK Stablecoin Regulations Only Weeks Away From Taking Shape

Stablecoin regulations are expected to be introduced as early as August.

Key Takeaways:

- The UK government will likely introduce legislation to create a stablecoin regulatory framework in August.

- The Bank of England (BoE), the Payment Systems Regulator (PSR), the Financial Conduct Authority (FCA), and a couple of more regulators are working together on stablecoin regulation.

- In April 2022, the UK Treasury said that the stablecoins would be regulated under the 2017 Payment Service Regulations, the 2011 Electronic Money Regulations Act, and Financial Services Act.

Recent reports indicate that the UK Treasury is working on legislation to introduce a regulatory framework around stablecoins in partnership with the Bank of England (BoE), the Payment Systems Regulator (PSR), the Financial Conduct Authority (FCA), and a few more regulators. Stablecoin regulations are expected to be introduced as early as August.

The stablecoin regulatory framework could have come even earlier, but recent changes in the government, including the resignations of Chancellor of the Exchequer Rishi Sunak and the UK Prime Minister Boris Johnson, may have set back the planned schedule. Deputy BoE Governor Jon Cunliffe also confirmed the same at Qatar Centre for Global Banking and Finance’s annual conference, where he said that the plans on stablecoin regulations were delayed due to “recent events.”

Earlier Consultation on Stablecoin Regulations

The talks around stablecoin regulations began in the UK government circles in April 2022, with a consultation taking place in the same month. During the consultation, the Treasury said that the government is contemplating regulating stablecoins as a means of payment under the 2017 Payment Service Regulations, the 2011 Electronic Money Regulations Act, and Financial Services Act.

Global Standard on Stablecoin Payment is Next?

While speaking at Qatar Centre for Global Banking and Finance’s annual conference, BoE Governor Jon Cunliffe also said that the international panel known as Payments and Markets Infrastructure Committee, which he heads, will begin working on a global standard for stablecoin payments in the next few months.

The key topics that the panel will discuss include which asset types will be allowed for backing stablecoins, their redemption process, and the mechanism to test the safety and stability of stablecoins.

The current crypto market downturn, which saw the global digital assets market cap drop below one trillion dollars from three trillion dollars, has led to a worldwide consensus that digital assets could no longer be allowed to operate without regulatory oversight. Thus, we are seeing news about various countries regulating crypto-assets one after the other. This makes one thing clear. Virtual Asset Service Providers (VASPs) must prepare to comply with a plethora of regulations at the country and global levels.

And when it comes to international crypto regulations, the FATF’s Travel Rule comes at the top, as it is already in implementation in 11 countries, with many more in the line to implement it. So, VASPs must start preparing to comply with the Travel Rule even if the country they are based in hasn’t implemented it yet. After all, with the FATF urging countries to speed up Travel Rule adoption, the day is not far when all nations will be on the same page in enforcing this global crypto-focused law.

The first thing that VASPs will require to comply with the Travel Rule is a Travel Rule Solution Provider (TRSP). And we have the best solution available in the market — Veriscope! It is also the only solution to the much-dreaded “Sunrise Issue” that VASPs encounter while implementing the Travel Rule. Visit here to read more about Veriscope: https://www.veriscope.network/ and contact our BizDev team for a discussion here: https://www.veriscope.network/contact

Also, follow us on Twitter, LinkedIn, Facebook, Discord, Telegram, and Medium to get regular updates on the evolving regulatory landscape in the world of digital assets.

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