Britain’s financial services minister says cryptocurrency regulations will prioritise stablecoins first.
First post-Brexit MoU agreement between U.K. and E.U. is encouraging for London finance firms.
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Britain will prioritise Stablecoin crypto rules to “manage risks to competition,” says Minister
Speaking at a City & Financial conference earlier this week, Financial Services Minister John Glen expressed an intent to focus initially on regulating stablecoins rather than the entire cryptocurrency industry. He said this should counteract the potential for private, well-resourced firms to rapidly exert dominance in the field by crowding out smaller competitors, adding that, “We need to manage risks to competition.”
In 2019, governments and central banks had raised concerns at a bid by Facebook Inc. to launch its own Stablecoin and possibly predominate in the market, advantaged by its pre-existing platforms. This move still exists, albeit in a different form.
Currently, stablecoin is small by market capitalisation when compared to bitcoin, although Glen says it is the largest component of cryptocurrencies by trading volume. An attractive quality of stablecoin is that it can align its market value with more traditional reserve assets, mitigating the volatility of bitcoin.
Minister Glen noted that his proposed interventions would not smother use of the tech underpinning cryptocurrencies such as bitcoin, but that regulating stablecoin represented a “once-in-a-generation opportunity to make vast strides in the efficiency of financial services, and ultimately benefit consumers and the economy as a whole.”
At the same conference, FCA representative Alex Roy said current “e-money” rules were unsuited to stablecoin, since it can be backed by currencies or commodities.
Read more on this story from Reuters.
First post-Brexit deal between U.K. and E.U. on financial rules is a positive first step for London-based financial firms
A new forum to discuss financial market regulation has been agreed upon by Britain and the European Union. This could herald the first step of a journey for London financial firms hoping to retrieve some of the market access lost due to Brexit.
Both the U.K. Treasury and European Commission issued statements last week agreeing a memorandum of understanding (MoU). The deal sets out a co-operative regulatory framework and establishes the Joint U.K.-E.U. Financial Regulatory Forum. The forum will be a platform for both the discussion of financial rules and procedures and the sharing of information.
Although both sides have agreed on the technical content and substance of the MoU, ratification is still due while they work together to conclude the formal validation process.
The deal is separate to any decision on equivalence- unilateral rulings on market access which either side can make- but it is a positive sign for U.K. firms hoping to recoup a portion of the losses incurred by Brexit.
Read more on this story from Bloomberg.
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