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Britain will begin to regulate the circulation of stablecoins

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Britain Will Begin to Regulate the Turnover of Stablecoins

Britain will begin to regulate the circulation of stablecoins

Britain will begin to regulate the circulation of stablecoins
CONTENT

  • UK government to tighten circulation of stablecoins

  • Diem scares European countries again

  • Cryptocurrencies remain "overboard" the law

International consortium of news organizations developing transparency standards.

The UK Treasury is going to tighten the circulation of stablecoins in the country. The new legislation will not affect cryptocurrencies, since they are still considered a risky asset that is used by a limited number of citizens.

Unsecured stablecoins will be prohibited

Britain will begin to regulate the circulation of stablecoins

The UK government has published a 46-page advisory document outlining the concept of digital asset regulation in the country. The authorities intend to take control of the turnover of stablecoins, fearing that this rapidly developing segment will compete with the traditional financial system.

The authors of the document admit that stablecoins are popular among users, and it would be problematic to ban their circulation. Given that coins are actively used to make payments, the authorities see them as a risk to financial stability..

Treasury Secretary John Glen said the UK wants to maintain its leading position in financial innovation, while providing a safe and secure environment..

“We strive to create a regulatory environment that fosters innovation within the framework of high regulatory standards. Thus, people can safely use new technologies. This is important to ensure confidence in the financial system as a whole. “.

According to the advisory document, the UK government will impose strict oversight over both stablecoin issuers and related service firms. Unsecured stablecoins in fiat currency will be prohibited.

This decision was made due to the fact that the circulation of stablecoins and their use carry certain risks for the users themselves. These include high fees, complexity, personal consumer misuse, cyber attacks, and bad administration..

In addition, the government intends to create a “level playing field” for stablecoin issuers. In other words, the activity of the issuer of a stablecoin will be permitted as long as it does not threaten the country’s financial system. This paragraph of the document refers to the Diem stablecoin, which is directly indicated in the text, as well as to other global stablecoins such as USDT.

The consultation period will last until March 21, 2021.

Bitcoin and other crypto assets will remain outlawed

Britain will begin to regulate the circulation of stablecoins

The new regulation will only affect stablecoins. At the same time, bitcoin and other cryptocurrencies will remain “outside the perimeter” of the law. However, the government wants to strengthen regulation of consumer interaction and anti-money laundering (AML).

According to a recent study by the UK Financial Conduct Authority (FCA), the main purpose of cryptoassets is speculative investing, and consumers are aware of the risks involved. In the course of the survey, 47% of respondents said that for them the purchase of cryptocurrency is “a game of chance in which you can win or lose money”, and 89% assessed the lack of regulatory protection.

Meanwhile, US institutional investors are increasingly interested in Bitcoin. Michael Sonnenshine, head of investment firm Grayscale Investments, claims that not only hedge funds are entering the market, but other institutions, including pension funds..

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