The UK Treasury will issue a proposal for stablecoin regulation: We are opening a new chapter in the history of financial services

The UK Treasury has revealed that it is drafting proposals to regulate stablecoins, while also studying central bank digital currencies (CBDCs) as an alternative to cash.

In a statement released on November 9, UK Chancellor of the Exchequer Rishi Sunak noted the upcoming regulatory proposals and other goals for the UK financial services industry, including a review of the UK listings regime and support for green finance.

“New technologies such as stablecoins can change the way people store and exchange money, making payments cheaper and faster.”

The news comes as the UK and the EU enter a decisive week of negotiations on a post-Brexit trade deal. Chancellor Sunak said he hopes the UK’s financial services industry will lead “the global conversation on new technologies such as stablecoins and central bank digital currencies” moving forward:

“We are opening a new chapter in the history of financial services and re-establishing the UK as a world-class financial centre. Our plans will ensure the UK remains an open, attractive and well-regulated market.”

While details are unclear, the statement said the draft would require stablecoin schemes to adhere to the same minimum standards as entities operating with other payment methods.

The document also reveals that both the Bank of England and the Treasury are currently researching CBDCs, with the chancellor welcoming the two departments’ work on “whether and how central banks could issue their own digital currencies as a complement to cash.”

After Facebook announced its plans to launch its digital currency Libra in June 2019, the regulatory implications of stablecoins became a major topic of concern.

Since then, European lawmakers have called for strict and clear regulatory guidelines before private stablecoins take root in their jurisdictions, also highlighting concerns about monetary sovereignty and consumer protection.

In contrast, the U.K. chancellor appeared to offer a more positive assessment of the burgeoning stablecoin industry, noting that stablecoin initiatives would face the same regulation as existing payments firms.

We will publish a consultation to ensure that new privately issued currencies and stablecoins meet the same high standards we have for other payment methods.
The Bank of England and the Treasury are considering whether central banks could issue their own digital currencies as a complement to cash.
— Rishi Sunak (@RishiSunak) November 9, 2020