Bank of England has unveiled plans to implement stablecoin regulations on November 10

The Bank of England stated on Wednesday that the UK will implement its stablecoin regulatory framework at the same pace as the U.S. Through a collaborative transatlantic task group, the initiative aims to protect jobs in the UK, promote economic growth, and harmonize crypto regulations with those of the U.S.

Bank of England Deputy Governor Sarah Breeden said that the central bank will publish its much-awaited consultation on stablecoin legislation on November 10.  The proposed new regulations will initially only apply to what the BOE deems “systemic” stablecoins that are anticipated to be widely used for payments

According to Breeden, other stablecoins would continue to fall under the purview of the Financial Conduct Authority under a less stringent regime. 

UK plans stablecoin rules and market innovations

Breeden stated that temporary stablecoin restrictions of up to £20,000 ($26,000) for individuals and £10 million for enterprises are part of the upcoming proposals. According to Breeden, the UK’s mortgage industry is primarily bank-based, which makes it more susceptible to sudden changes of deposits into stablecoins.

Breeden added that the Bank of England’s overarching goal is to ensure that its framework is operational as rapidly as the U.S. She urged that it’s important to remember, though, that prioritizing everything isn’t always the greatest option.

According to Breeden, being effective is just as important as being first. The UK remains significantly behind the U.S. in terms of overall technological breakthroughs and product development. Brendan claimed that the U.S. economy is far bigger and more varied than the UK’s in every way.

The Bank of England’s announcement coincides with mounting pressure on the UK to comply with recent U.S. crypto rules and regulations in order to remain competitive.

On 9 October, the UK government announced its intention to designate a “digital markets champion”. The digital market champion will lead ongoing initiatives to improve the UK government’s wholesale financial markets through the use of blockchain and DLT technology.

Additionally, the government plans to establish the Dematerialization Market Action Taskforce, a new organization that will oversee the UK’s transition away from paper share certificates.

UK FCA lifts crypto ETN retail ban

Notably, on October 8, the UK Financial Conduct Authority (FCA) lifted the 4-year retail ban on cryptocurrency ETNs, expanding availability beyond professional investors for the first time.

The FCA stated that the end of restrictions brings the UK into line with nations including the U.S., Canada, Hong Kong, and the EU. The lifting of the ban will also allow anyone to access cryptocurrency investment products as long as they are traded on an FCA-approved investment exchange.

Aruliah added that the momentum of market developments and regulatory progress in cryptocurrency counts. He argued that to remain competitive, the UK must maintain the pace at which other regions, such as the U.S. and Singapore, are advancing.

The end of the restriction follows a consultation process carried out earlier this year. The FCA first suggested in June that the prohibition on cryptocurrency ETNs for individual investors be lifted.

FCA Executive Director of Payments and Digital Finance David Geale explained that the market has changed since the FCA limited retail access to ETNs. He added that ETNs are now more widely available and well-understood.

Geal claimed that although the FCA has stated that it will continue to monitor market developments and review its approach to high-risk investments, ETN products are still not listed on the London Stock Exchange. He claimed that retail investors cannot purchase ETNs since the ban on crypto asset derivatives for retail remains in place.

According to Brett Hillis, partner and crypto regulation expert at international law firm Reed Smith, crypto ETNs are considered the safest and most prudent method for investing in bitcoin. Hillis claimed that the FCA is unlikely to allow consumers access to cryptocurrency derivatives due to their complexity and the regulator’s high standards for consumer safety.

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