The regulator in the United Kingdom wants to regulate stablecoins, but cryptocurrencies such as Bitcoin are out of scope for the time being. Reuters news agency quotes John Glen, the country’s finance minister. ‘We want to create a level playing field’.
British minister on stablecoins
Now that the island has become administratively separated from the European mainland, it will also have to devise rules on its own for so-called cryptocurrencies and digital assets. She will also monitor how the European Union wants to deal with new currencies.
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Think of synthetic dollars such as Tether USDT and USDC, but also Diem, the future payment currency of tech giant Facebook. And then Europe, but also the United Kingdom, wants to make their own digital version of their euros and pounds.
The idea is that central banks will gain a more dominant position in the market and that citizens also hold a bank account with a central bank. How that should turn out in practice is unknown. But governments are, in imitation of China, firmly committed to digital, central bank currencies.
According to Glen, it is important that there is no uneven playing field between the various initiatives. He implicitly refers to a Facebook, which has 2.7 billion active users per month. The Diem foundation wants to issue their currency through Switzerland.
John Glen warns:
‘There is a chance that some companies will gain direct dominance in this new money market because they plug directly into their social media. We think that intervention in the larger crypto market is less necessary. “
Stablecoins are issued on the blockchain, just like Bitcoin, but the underlying value is backed by traditional coins such as the dollar, euro and pound. A currency like Tether USDT has quickly become a darling of the market. Traders use USDT to get in and out of Bitcoin. But it is primarily an ‘industry’ currency, not a means of payment.
According to Glen, the British government does not want to hinder innovation and is therefore open to new technologies such as the proof-of-work technology underlying Bitcoin.
‘We now have a great opportunity to make our financial services a lot more efficient and ultimately consumers should reap the benefits’.
The country is also not going to request an e-money license from companies that want to market a stablecoin. For example, credit card companies need such a license to make wireless payments possible.
The regulation of stablecoins is also separate from the supervision of bitcoin companies. Just like in the Netherlands, bitcoin exchange offices in England must apply for a license. Currently, only four licenses have been issued, but there are still dozens of pending applications to the Financial Conduct Authority.