U.K. financial regulators, including BoE and FCA, released discussion papers on regulating stablecoins.
Stablecoin issuers are required to fully back digital assets with deposits at BoE to ensure stability.
FCA to oversee the wider crypto sector, stablecoin issuers must seek authorization for circulation.
The U.K. financial regulators, including the Bank of England (BoE) and the Financial Conduct Authority (FCA), have released discussion papers outlining plans to regulate stablecoins. These proposals are part of a broader effort by the U.K. government to oversee the crypto sector.
The discussion papers were published alongside a letter from the Prudential Regulation Authority (PRA) to bank Chief Executive Officers on innovations in the use by banks of deposits, e-money, and stablecoins, and a roadmap paper. The PRA expects lenders in the country to mitigate risks “of contagion.”
The letter stated, “Contagion risks will be lower for stablecoins used in systemic payment systems regulated by the Bank, than for e-money or other regulated stablecoins captured by the FCA’s regime.”
In the discussion paper released on Monday, the BoE revealed a compr…
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