The UK Treasury released a consultation document on stablecoins which speaks of empowering the Bank of England in regulatory matters, along with the Financial Conduct Authority (FCA). The consultation document was introduced after the government reached out for feedback and opinions from concerned bodies like PayPal, as well as HSBC UK, Circle, and Barclays.
The Treasury has understood the fact that the Banking Act of 2009 provides the Bank of England sufficient muscle to cover areas related to stablecoins. However, the Treasury is yet to come out with clarifications regarding the existing regulatory features. As per the government of the UK, a major number of people approached were one with the government’s idea of ensuring further regulatory control on stablecoins.
The document outlines the game plan for the Bank of England if it was to take regulatory control over stablecoins. The Bank will be responsible for matters of prudence, whereas FCA will be looking into areas of conduct. In this case, the Bank will be provided with the authority to stop the FCA from reacting with regard to anything they feel is systemic. In that situation, the Prudential Regulation Authority will be brought in if the FCA response causes a financial imbalance.
The government will require details from the Bank on its plan of action regarding the regulation of the latest technologies. It also understands the limitations of lessening the risk factors related to financial imbalance, like the uncertainties involved with digital assets such as stablecoins. The Bank of England has been involved in carrying out stablecoin, as well as distributed ledger technology research, and the conclusion is that stablecoins come with effectiveness in areas of payments.