UK financial markets bill to authorise regulation of stablecoins, service providers
The bill will become a law once it passes through the House of Commons and House of Lords
By Shashank Bhardwaj
On Wednesday, the bill meant to preserve UK’s supremacy in the Post-Brexit financial world - The Financial Services and Markets Bill - was presented with a set of regulations to govern stablecoins. However, before the bill can be considered a law, it still needs to pass two more readings in the House of Commons - the committee and report stages. And later pass through the same stages in the House of Lords.
The bill revoked certain EU laws and retained a few. Besides, it contains some amendments to insurance laws, provisions for the victims of financial fraud, and newly formed objectives of growth and competitiveness.
Regarding the section on digital assets, the bill has made amendments to the Banking Act of 2009 and the Financial Services (Banking Reform) Act of 2013 to include ‘digital settlement assets (DSAs)”, aka stablecoins. It also authorised the Treasury to exercise its power in regulating DSAs, DSA service providers, payments made with DSAs, and DSA insolvency arrangements. However, the Treasury needs to form these regulations in consultation with the Bank of England, the FCA (Financial Conduct Authority), and other appropriate regulators.
In his programmatic speech, Chancellor of the Exchequer Nadhim Zahawi confirmed the presence of stablecoin regulations in the UK bill. It should be known that though stablecoin regulations were always intended to be a part of the bill, the recent market meltdown, especially the downfall of the Terra-UST platform, had the observers doubtful of their inclusion in the bill. Another reason the regulations could have been eliminated from the bill was the walkout of pro-crypto members of the government - Economic Secretary to the Treasury John Glen and ex-chancellor Rishi Sunak - in July.
It is notable that crypto cynic Jon Cunliffe, Bank of England’s deputy governor for financial stability, has been incessant in his call for greater crypto regulation. Cunliffe had compared crypto regulations to ‘unsafe aeroplanes’ in one of his speeches on July 12, with special mention to the Terra UST crash.
Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash