In a new consultation paper published on Tuesday, the Treasury of the United Kingdom proposed a new set of regulatory changes for the stablecoin industry.
In its report, the Treasury highlighted the importance of stablecoins in innovation but also noted their ability to impact financial stability should systemic failures occur. Specifically, the Treasury called for:
- The appointment of the country's Financial Market Infrastructure Special Administration Regime (FMI SAR) as the primary entity to address the potential systemic failure of digital settlement asset (DSA) firms. DSAs include, but are not limited to, stablecoin issuers, wallet providers and third-party payment providers.
- The expansion of the FMI SAR's mandate to include and oversee the timely return or transfer of customers' funds in the event of failure of a DSA firm.
- The assignment of greater powers to the Bank of England to direct administrators and create regulations in support of the FMI SAR.
- A requirement that the Bank of England consult with the nation's Financial Conduct Authority prior to seeking an administration order or directing administrators in the event of regulatory overlap.
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