U.K.’s first steps towards Crypto Regulation.
The U.K. Financial Services and Markets Bill (FSMB) was published on July 20, 2022. The FSMB, in a first-of-its-kind move, has included regulatory provisions for stablecoins and other digital assets. According to Chancellor Nadhim Zahawi, it can pave the path for a transparent, internationally competitive, and technologically sound financial sector
What are Stablecoins?
Stablecoins are like any other form of cryptocurrency, only more stable as their name suggests. The value of stablecoins is attached to the performance of a traditional fiat currency, like the US dollar. As a result, stablecoins suffer fewer fluctuations as compared to other cryptocurrencies. However, the privacy and time-effectiveness of the cryptocurrency are not affected. Some popular stablecoins include Terra and Tether.
The recent legislation aims at regulating the crypto market, particularly stablecoins and their uses. FSMB has the objective of bridging the gap between traditional and digital currencies. The legislation calls for stablecoin issuers that accept payments to obtain a license from the Financial Conduct Authority (FCA).
Although stablecoins are more dependable than other cryptocurrencies, there have recently been concerns about the size of their cash reserves. According to Harry Eddis, one of the global fintech heads at Linklaters, regulating stable coins via legislation would prove to be historical. For the first time, the U.K. plans to bring legislation about a particular cryptocurrency. Eddis added that the initial bill limits the scope of stablecoins but lays the foundation for more deliberation and extension of regulations soon.