The deadline for responses to the discussion papers on stablecoin regulation in the United Kingdom has been extended by the Bank of England (BOE). While the original deadline was Feb. 6, the comment period for the BOE’s paper has been extended until the morning of Feb. 12. However, the deadline for comments on the Financial Conduct Authority (FCA) discussion paper remained Feb. 6. The Association for Financial Markets in Europe (AFME) submitted comments to the FCA on time.
The discussion papers, released on Nov. 6, were part of a “joint publication package” that aimed to establish comprehensive regulation for crypto-assets. Although the papers were thematically related, they approached the topic from different perspectives.
The BOE focused primarily on issues related to the use of a sterling-backed stablecoin in systemic payment systems, including transfer functions and requirements for wallet providers. On the other hand, the FCA discussion paper examined various use cases for stablecoins and placed particular emphasis on auditing and reporting, prudential requirements, backing, and custodianship. The FCA stressed the principle of “same risk, same regulator outcome.”
The FCA will also regulate custodianship, but the BOE acknowledged the possibility of adding additional requirements in cases such as off-chain transactions and Anti-Money Laundering and Know Your Customer requirements for unhosted wallets. Dual regulation may also apply to services that are either systemic in their own right or provide essential services to systemic payment systems using stablecoins or recognized stablecoin service providers.
James Kemp, the managing director of technology and operations at AFME, praised the U.K. proposals as a “positive step” in a statement. However, he expressed concern about the treatment of securities tokens.
According to the FCA, securities tokens are “cryptoassets which […] already meet the definition of a specified investment under the RAO [the Financial Services and Markets Act 2000 through the Regulated Activities Order] and are therefore already subject to regulation.” Kemp suggested that the FCA should postpone certain parts of the proposal related to stablecoins issued overseas until international frameworks and mature markets are established abroad.
Stablecoin regulations are expected to be implemented in the U.K. by 2025.