Following the collapse of Terra Luna and FTX last year, UK policymakers have committed to introducing a new regulatory regime for crypto assets and stablecoins to ensure sustainable and secure mainstream adoption.
United Kingdom policymakers have worked closely with various financial institutions and other stakeholders over the past year to create a detailed regulatory framework for cryptocurrencies and stablecoins. According to CryptoUK, the trade body formed to represent the digital asset sector in the UK, the recent publication by HM Treasury (HMT) on the future financial services regulatory regime for cryptocurrencies which was in response to an initial consultation on the management of failure. Systemic Digital Settlement Assets provided a clear overview on fiat-backed stablecoins.
Additionally, the country has recorded notable demand for fiat-backed stable coins to reduce the high transaction costs associated with traditional payments. It is noteworthy that U.K. proposed solutions on cryptocurrencies and stablecoins in response to the failure of FTX and Alameda Research, which affected both retail and institutional investors.
The Bank of England (BoE) and the Financial Conduct Authority (FCA) on stablecoins.
With the digital pound as the big picture, the Bank of England (BOE) published a regulatory approach to the stablecoin market in close collaboration with the Financial Conduct Authority (FCA) and requested members of the public to provide their feedback. Specifically, the BoE and the FCA have set until February 6, 2024 for members of the public and relevant crypto players to provide their opinions on the proposed stablecoin regulations.
According to Sheldon Mills, executive director of consumers and competition at the FCA, stablecoins have proven essential in facilitating faster and cheaper payments. Additionally, Mills said there has been significant demand from institutional investors to offer stablecoins in a regulated manner, making their response important.
“We look forward to continuing our engagement with the government, our partners and the wider crypto industry as we move forward with the government’s first phase of development of the UK crypto regulation regime and beyond,” Mills said. noted,
Similar sentiments were echoed by Sarah Breeden, deputy governor for financial stability at the Bank of England, who said the stablecoin regulatory proposals are aimed at supporting secure innovation and ensuring public trust.
market Outlook
With over 31 million crypto users in Europe, the United Kingdom is keen to take advantage of the new blockchain technology to build its economy. Furthermore, rising inflation has caused the Central Bank to raise its interest rates amid the ongoing Russian invasion of Ukraine, which has undoubtedly affected Britain’s economic growth outlook.
Meanwhile, the ongoing crypto regulatory phase in the United Kingdom will provide a clearer picture for traditional banks and Web3 projects to work together. Furthermore, some financial institutions, led by Chase Bank UK, have already banned crypto-related transactions since the middle of last months.

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