Similar to the EU’s framework for crypto assets that are presently making its approach through the legislative method, the U.K.’s regulatory executes may also focus heavily on stable coins.
Regulation for the segment should be made on “equivalence”, meaning that crypto-related financial services that accomplish a similar function to current financial services must be focused on the same laws, the FPC said.
Until crypto assets are carried fully under the regulatory net, the UK government is focusing on making sure that risks from crypto are managed in the banking sector. The Financial Conduct Authority on Thursday said businesses must fully explain to consumers the risks from free crypto
Risks from crypto must be “considered fully” by the boards of banks and they might likely need to familiarize their existing risk management strategies and systems.
“We can also expect businesses to discuss the future prudential treatment of Crypto-asset experiences with their supervisors,” Woods alleged in reference to the amount of capital required to cover any losses.
Stablecoins, which are supported by assets or cash, that turn into systemically vital need to be backed by high-quality, liquid assets and loss-absorbing capital similar to that said by banks, the FPC said.
Using pledges with commercial banks to offer to back for stable coins might pose significant financial permanence risks if pursued at scale, the FPC said.
The U.K. government is set to expose its plans for regulating the crypto industry in the coming weeks, according to CNBC.
Although facts are still being finalized, the regulatory government will effort heavily on stable coins which Cryptocurrencies set the value of other assets, CNBC stated Sunday citing unnamed sources.
The U.K. Treasury Department has discoursed the impending regulatory package with multiple crypto firms containing Gemini, the issuer of stable coin Gemini dollar (GUSD), which is fixed to the U.S. dollar, according to the report.
The European Union’s landmark regulatory structure for crypto assets, presently moving through the bloc’s complex legislative process, also has full prominence on oversight into stable coins.
The U.S. Congress is also functioning on precise regulations for stable coins through perspective risks these reserved Cryptocurrencies may pose to financial stability.
On Thursday, U.K. regulators issued a report voicing concerns about how crypto adoption poses financial risks.
Rishi Sunak, Britain’s finance minister, is set to broadcast the U.K. government’s regulatory tactics for crypto in the coming weeks, according to the report.