UK Stablecoin Legislation Expected in “Months, Not Years,” Says Circle Executive

Crypto firm Circle, the second-largest stablecoin issuer, is optimistic that the UK will introduce stablecoin regulations within “months, not years.” Dante Disparte, Circle’s global head of policy, shared this outlook during a recent interview with CNBC in London, highlighting the urgency for formal legislation in the burgeoning stablecoin market.

Disparte warned that without stablecoin regulations, the UK risks falling behind regions like the European Union and Singapore, which have already started implementing their own regulatory frameworks.

Reflecting on the UK’s cautious approach to crypto regulation, Disparte acknowledged the challenges faced by the industry in 2022, including the high-profile collapse of the FTX exchange, where stakeholders are still awaiting refunds in 2024. He noted that the UK’s delay in enacting strict laws may have been prudent, allowing the government to learn from global market upheavals.

However, he cautioned against further delays, saying they could hinder innovation and economic growth. “You can’t have the economy of the future unless you have the money of the future,” Disparte argued. He highlighted the potential benefits of stablecoins for the UK’s financial landscape, such as improvements in real-time payments and the digitization of the British pound.

The Stablecoin Market: Growth and Controversy

Stablecoins are a multibillion-dollar industry valued at over $170 billion. Tether’s USDT is the largest stablecoin with a market capitalization exceeding $120 billion. Circle’s USDC ranks second with a circulating value of over $34 billion.

However, the market has faced significant controversies. In 2022, Tether’s USDT briefly lost its $1 peg following the collapse of the rival stablecoin Terraform Labs’s terraUSD. This led to questions about whether USDT was genuinely backed 1:1 by an equivalent amount of dollars and other assets in Tether’s reserves.

Bank of England Exploring CBDC

The Bank of England is also exploring the possibility of a central bank digital currency (CBDC), informally referred to as “Britcoin.” Disparte mentioned that discussions with Bank of England officials have been promising.

While previous Conservative government plans projected stablecoin regulations to be in place by mid-2023, the current Labour administration has yet to assert a strong stance on crypto regulation. Nonetheless, there are indications that discussions are ongoing regarding the UK’s role as a leader in financial technology.