The Central Bank Digital Currency (CBDC) race takes a fresh turn as the U.K. seems to be pushing the envelope with the announcement of upcoming regulatory proposals for Stablecoins and ultimately CBDCs. The U.K. Treasure department has revealed that the draft proposal is in the works, while it continues to explore CBDCs as an alternative to cash.
According to a November 9 announcement published by U.K. Treasury Chancellor Rishi Sunak, besides the upcoming regulatory proposals and goals for the nation’s financial industry, the Treasury is also working on a review of the U.K.’s listings regime and support for green finance.
“New technologies such as stablecoins – privately-issued digital currencies – could transform the way people store and exchange their money, making payments cheaper and faster.”
The announcement comes amidst ongoing negotiations between the U.K. and the European Union over the post-Brexit trade deal. Chancellor Sunak added that he expects U.K.’s financial services sector to lead “the global conversation on new technologies like stablecoins and central bank digital currencies” moving forward:
“We are starting a new chapter in the history of financial services and renewing the UK’s position as the world’s pre-eminent financial center […] Our plans will ensure the UK moves forward as an open, attractive and well-regulated market.”
Regulations on the way
The announcement doesn’t go into detail, but it asserts that per the forthcoming guidelines, stablecoins will be required to comply with the same as entities operating with other methods of payment.
The documents also highlight that both England’s central bank and treasury are exploring CBDCs, with the Chancellor welcoming work from the two departments into “whether and how central banks can issue their own digital currencies as a complement to cash.”
The rush to focus on the regulatory implications of stablecoins was initiated with Facebook’s announcement of its plan to launch its digital currency Libra in June 2019. European lawmakers have been consistently calling for the development of clear regulations, citing concerns surrounding “monetary sovereignty.”
However, Sunak seems to be much more open-minded when it comes to assessing the stablecoin market, noting that this sector will be facing the same oversight as traditional payments firms that exist today.
The recent announcement comes just a month after the U.K. Financial Conduct Authority announced rules that ban the sale of cryptocurrency derivatives and exchange-traded notes to retail users. According to the FCA, these investment products are supposedly “ill-suited” for retail customers.