Nadhim Zahawi, the new Chancellor of the UK’s Exchequer, has proposed plans to regulate the usage of stablecoins. The bill sent on July 20th to the Parliament hands power to the Bank of England.
Nadhim Zahawi Issues New Rules For Stablecoins
According to the proposal, the BoE can limit the functionality of the FCA (Financial Conduct Authority) in regulating crypto for payment purposes. Also, the BoE can carry out such actions if the action of the FCA can cause financial instability.
Meanwhile, Zahawi became the new Chancellor after the former Chancellor resigned. The past Chancellor, Rishi Sunak, had resigned due to ongoing issues with the ex-Prime Minister on tax.
While in office, Sunak pushed for the United Kingdom to be a crypto hub for digital assets. He even went as far as commissioning the Royal Mint.
The Royal Mint was to help develop NFTs representing the country’s push into digital assets. However, his resignation brings uncertainty about the country’s digital asset adoption.
Meanwhile, the bill provides a definition for DSAs (digital settlement asset) service providers. It refers to them as those that handle payments services where digital assets are used.
In addition, there are also those who protect these settlement assets and their cryptographic keys. Besides, the UK Treasury can make a DSA a licensed service provider.
Rules For The Operation Of DSA
The Treasury must ensure it does not make decisions that compromise its financial stability. Also, it must look at the DSA’s services, the value, and the payment relationship.
Furthermore, the BoE has the right to ask the DSA for rules guiding its operations. Also, it can request rules for entities engaging with the DSA and notification of changes.
Additionally, the DSA must seek approval from the England Bank before changing its rules. Also, the BoE must work with the FCA on regulating DSA and its products.
In 2022, the UK Treasury met with stakeholders in the crypto industry. They include Paxos, Coinbase, Binance, Kingsway Capital, Goldman Sachs, and Circle.
The purpose of the meeting was to discuss regulations of crypto assets. Following the fall of TerraUSD in May, the Treasury Department issued a proposal to regulate stablecoins and their issuers.
The UK is not the only country working on stablecoin regulation. Other countries that have released bill for stablecoin regulation include the US and South Korea.
With the recent bill on stablecoin regulation, the country is gearing up for stablecoin adoption. Perhaps, UK citizens would be able to use them for payment settlement before the end of 2022.