Crypto Experts in UK Call for Change on the Latest Stablecoin Regulations in His Country

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Bittime  - Crypto experts in the UK are asking the country's government to change the latest stablecoin regulations. Some crypto experts consider the latest requirements to be too onerous and inefficient, as they could reduce liquidity and stifle innovation. 

How are Stablecoins Regulated in the UK?

The UK is one of the countries that is proactive in regulating the crypto sector, including stablecoins. In June 2023, the UK Parliament passed the Financial Services and Markets Act 2023. 

This law gives financial regulators, such as the Bank of England (BoE) and the Financial Conduct Authority (FCA), the authority to supervise crypto activities, including stablecoins.

In October 2023, the UK government has released its final proposals for crypto regulation, which includes plans to regulate stablecoins backed by fiat currencies, such as the US dollar or pound sterling.

This proposal is expected to be realized in the form of legislation in early 2024.

According to the proposal, issuers of stablecoins backed by fiat currency would have to meet the following requirements:

• Have permission from the FCA to carry out relevant crypto activities, such as issuing, transferring or holding stablecoins.
• Hold fiat currency reserves equal to the number of stablecoins in circulation, and deposit them at a central bank or recognized financial institution.
• Provide users and investors with clear and accurate information about the nature, risks and rights associated with stablecoins.
• Comply with applicable cybersecurity, data protection and anti-money laundering standards.
• Report their performance and activities regularly to the FCA and BoE.

The proposal also includes plans to regulate stablecoins backed by other assets, such as gold or crypto assets, as well as stablecoins that use algorithmic mechanisms to maintain price stability.

However, this proposal still requires further study and consultation before being implemented.

Also read:

How Do British Crypto Experts Respond?

In general, crypto experts in the UK welcome the government's plans to regulate stablecoins, as they are seen as providing confidence and clarity for crypto industry players. However, some crypto experts also criticized the proposal, considering it too strict and inflexible.

One of the criticisms that has arisen is related to the requirement to hold fiat currency reserves equivalent to the number of stablecoins in circulation.

Some crypto experts consider these requirements to be too onerous and inefficient, as they can reduce liquidity and stifle innovation. 

Additionally, some crypto experts also worry that these requirements could benefit large, established stablecoin issuers, such as Tether or USDC , and curb competition from new and small stablecoin issuers.

Therefore, some crypto experts suggest that the UK government adopt a more proportional and risk-based approach in regulating stablecoins, which could take into account the characteristics and impact of different types of stablecoins. 

Some crypto experts also suggested that the British government coordinate with other countries in regulating stablecoins, in order to create consistent and balanced global standards.

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Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

Also read:

What are Algorithmic Stablecoins?

Tether, the Controversial Stablecoin

What are Stablecoins and How Are They Different from Fiat?

What is VNST Stablecoin? Features and Advantages

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