UK Government Presents Update on Fiat-Backed Stablecoin Regulation Plans

According to Cointelegraph, the United Kingdom government has presented an update on its plans to regulate fiat-backed stablecoins. The document, published on October 30, aims to facilitate and regulate the use of fiat-backed stablecoins in UK payment chains. His Majesty's Treasury intends to introduce specific legislation to parliament in 2024, bringing the regulation of fiat-backed stablecoins under the Financial Conduct Authority's (FCA) mandate. The Treasury is considering making local companies, 'arrangers of payment,' authorized by the FCA, responsible for ensuring the overseas stablecoin meets local standards.Non-fiat-backed types of stablecoins, including algorithmic ones, will not be allowed into regulated payment chains. However, the document does not impose a direct ban but states that 'these transactions will remain unregulated.' HM Treasury considers them subject to the same requirements as unbacked cryptoassets. For standard stablecoins, the FCA will have the authority to demand that stablecoin issuers hold all reserve funds in a statutory trust. The terms of the trust will be set out in the FCA's rules, including redemption obligations in case of the firm's failure. In such a scenario, UK stablecoin issuers will face procedures under the Insolvency Act 1986.The central framework for all kinds of crypto, the Financial Services and Markets Act, passed the upper Chamber of the British Parliament in June 2023. The Treasury's document refers to the bill as the FCMA 2023, under which the Treasury, the Bank of England, and the FCA get their powers to regulate crypto and stablecoins in particular.