The United Kingdom is striving for regulating stablecoins on its shores as Nadhim Zahawi, the new Chancellor of the Exchequer, is looking to establish his foothold as the new sheriff in town.
Zahawi presented the Financial Services and Markets Bill to the members of Parliament on Wednesday with a proposal to regulate stablecoins and "digital settlement assets" as a form of payment assets in the UK.
"In fostering these new innovations, the Bill will also enable the creation of Financial Markets Infrastructure Sandboxes – allowing firms to test the use of new technologies and practices in financial markets, increasing efficiency, transparency, and resilience of new products," the Treasury said in a press release.
The United Kingdom, under Rishi Sunak, who left the Treasury to run a campaign for the Prime Minister’s seat under the Conservative Party, has been trying to provide a comprehensive regulation that will impact stablecoins in particular. While Sunak’s approach featured inclusive participation from the public and market stakeholders, Zahawi seems to be trailed a divergent path in this regard.
The Financial Services and Markets Bill has a controversial clause as it will grant ministers the legal powers to "call in" regulatory decisions made by the Bank of England (BoE). Despite the apparent need to pass the regulation promptly, the passage of the Bill will have to be ratified by both the House of Commons and the House of Lords before binding.
The collapse of Terra USD (UST) algorithmic stablecoin has sent an urgent signal to regulators to hasten the rollout of regulations that will govern the crypto ecosystem. Japan was the first country to pass a law to govern stablecoin issuance and use, and through the Markets in Crypto Assets (MiCA) framework, the European Union has also agreed on its framework. However, it is pending final approval and implementation.
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