“Is this a good or bad sign for stablecoins?”
The Bank of England (BoE) and the Financial Conduct Authority (FCA) intend to impose restrictions on stablecoins as a form of payment and develop new regulations for the sector.
The implementation of the bill will help regulators establish cryptocurrency regulations and incorporate stablecoins into current payment legislation.
The regulatory implementation for the stablecoin will also be the same as commercial bank money, however it will not receive the same protection as the Financial Services Compensation Scheme (FSCS) insures customer deposits up to $105,059.
Even so, stablecoin regulations will be based on principles set by the Bank of International Settlements committee on payments, market infrastructure and the Organization of International Securities Commissions.
According to deputy governor Jon Cunliffe, new ledger technology that supports crypto could give central banks or tokenized bank deposits the opportunity to issue digital banknotes.
Cunliffe strongly believes that approach can give banks and non-banking institutions a clearer understanding of the requirements of their respective regulatory regimes when developing payment solutions using technology.
As the BoE explores the concept of a digital pound, it is also examining methods to ensure token transactions are settled in central bank money, where one solution involves the creation of a new ledger system.
