The UK central bank has responded to a consultation on systemic stablecoins, indicating that it is still devoted to the rule.
The BoE published, the “Payments Regulation and the Systemic Perimeter” framework, which established co-supervision procedures between the Bank of England (BoE) and Financial Conduct Authority (FCA).
Moreover, BoE will take the lead on prudential issues to ensure the stability of financial systems. The FCA will be in charge of the conduct.
According to the consultation paperwork, “in cases of bankruptcy, systematically significant PSPs or EMIs will move from coverage under the Financial Market Infrastructure SAR controlled by the Bank and out of the Payments and Electronic Money SAR overseen by the FCA.”
When it comes to opinions on the primacy of the FMI SAR (the regime) in situations involving the bankruptcy of upcoming systemic payments firms, this was generally warmly regarded,
The collaborative approach would also involve the Prudential Regulation Authority and Payment Systems Regulator of the BoE as well as certain other regulatory entities.
The consultation brief advised regulators to concisely describe their cooperative efforts in a memorandum, outlining the precise functions that each regulatory agency served within the framework.
As a result, the BoE would have the power to stop the FCA from pursuing action against institutions that have been designated as systemic, especially if doing so increases concerns about financial stability.
The UK announced its desire to subject systemic stablecoins to current legislation in a series of consultations last year, with the additional goal of assuring the restoration of customer cash while preserving efficient operations.
As part of broader post-Brexit financial regulatory reforms, the UK introduced laws in June to govern digital currency and stablecoins.
The new legislation, known as the Financial Services and Markets bill, has given authorities the power to create a specific framework for the digital asset market, promoting the “safe adoption of cryptocurrencies in the UK.”
Additionally, the bill gave the BoE authority to set up a mechanism for systemic stablecoins. The BoE has stated that it intends to publish the regulations covering systemic stablecoins in the latter half of 2023.
Andrew Griffith, the UK’s Economic Secretary to the Treasury, praised the law, referring to it as a “landmark piece of legislation” that returned control of the “financial services rulebook” to the national government.
“By removing old EU laws set in Brussels it will allow for billions of investments, cash that can unlock innovation and develop the economy,” he stated.
He further stated, “2023 is currently showing to be an important year for restructuring our financial services.”