UK pursues “leading” role in fintech with stablecoin bill

The UK treasury unveils plans to regulate stablecoins as part of new Financial Services and Markets Bill

Image source: ChancellorMansionHouseSpeech/HMTreasury.

On Wednesday, recently appointed Chancellor of the Exchequer, Nadhim Zahawi introduced a new Financial Services and Markets Bill (FSMB) that intends to bring stablecoins into the remit of UK regulators. 

In his first speech at Mansion House Zahawi said: “[The bill] reinforces the UK’s position as a leading centre for technology as we safely adopt crypto assets.” 

The FSMB represents a major financial regulatory shake-up since the UK’s departure from the European Union and demonstrates its willingness to contend with the crypto industry

In the bill, HM Treasury has been granted new powers to introduce rules on the regulation, payment systems and service providers dealing with stablecoins and “digital settlement assets”.  

Alongside an expansion of the Treasuries regulatory oversight, Financial Markets Infrastructure (FMI) sandboxes have also been created. 

These sandboxes will allow firms to test new technologies and other programmable and blockchain-related capital market products in a regulated environment.

However, the Treasury must consult with the Financial Conduct Authority, the Bank of England and other regulatory bodies before changes are made. 

By extending existing frameworks to cover stablecoins and strengthening the cohesion between regulatory bodies, the bill aims to cement the UK as a leading player in the crypto industry. 

For Katie Fry-Paul, an associate at law firm Taylor Wessing, the bill represents a “bold statement of intent”. Providing the HM Treasury with enough “wiggle room” to react to developments in the rapidly growing crypto industry. 

This positive view is also shared by Janine Hirt, the CEO of Innovate Finance who believes that the new regulatory approach to stablecoins and crypto will play an “integral part in the next phase of the UK building on its remarkable global fintech prowess.” 

Yesterday, the FSMB completed its first reading in the House of Commons, its first step on its path to being enshrined in law.