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The United Kingdom’s finance ministry intends to prioritize regulating stablecoins that are used as means of payment.
In a report released Monday, the ministry said it will be releasing further regulatory guidelines this year in order to protect consumers while fostering innovation around digital assets.
“This response document confirms the government’s intention to take the necessary legislative steps to bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory perimeter, primarily by amending existing electronic money and payments legislation,” the report read.
Stablecoins are expected to become a “widespread means of payment” in the near future, the ministry predicts.
The report, which investors and industry leaders have been anticipating since late March, highlights the ministry’s desire to be at the forefront of stablecoin regulation.
US lawmakers have been debating how to approach the growing stablecoin industry in recent months as well, most notably floating the proposal that stablecoin issuers would have to be a registered and insured bank.
The UK is also considering implementing a regulatory framework around stablecoins that mirrors the existing guidelines around banks. Stablecoin reserves in particular are a main concern for the ministry, which suggests in the report that “stablecoins would be backed by central bank liabilities, deposits at commercial banks, or in high quality liquid assets respectively.”
In terms of accepting stablecoins as a means of payment, the report notes that the Electronic Money Regulations 2011 and Payment Service Regulations 2017 provide ample guidelines that can be easily applied to new digital asset technology.
“The government considers that an amended e-money framework can deliver a consistent framework to regulate stablecoin issuance and the provision of wallets and custody services,” the report read.
“Establishing a regulatory environment for stablecoins used as payment simultaneously creates a basis to enable market entry to support innovation, while ensuring that appropriate regulatory standards apply for the benefit of customers, market integrity and stability.”
The report focuses on how the government can safely and quickly bring stablecoin technology to consumers and interested parties.
“For consumers, bringing stablecoins into the regulatory framework means they will be able to use stablecoin services with confidence,” the report read
The government plans to introduce legislation to Parliament when possible, the report noted. A specific timeline was not given.