A series of documents have been released in the United Kingdom regarding the regulation of stablecoins. The Financial Conduct Authority (FCA) and the Bank of England (BOE) have both published discussion papers on the topic. In addition, the BOE’s Prudential Regulatory Authority (PRA) has issued a letter to CEOs of deposit-taking institutions, and the BOE has released a “cross-authority roadmap” to connect these documents. The aim of stablecoin regulation is to pave the way for broader regulation of crypto assets. The FCA’s discussion paper explores various use cases for stablecoins, including auditing and reporting, the backing of coins by the issuer, and the independence of the custodian of the backing assets. The paper suggests using existing client assets rules as the basis for redemption and custodianship, as well as using the senior management arrangements, systems, and controls sourcebook to organize business affairs. The FCA is also considering adapting existing prudential requirements for regulated stablecoin issuers and custodians to other crypto assets in the future. The BOE’s paper focuses on the use of sterling-based stablecoins in systemic payment systems, particularly in relation to wallet providers and other services. It overlaps with the FCA’s discussion on stablecoin issuers and deposit protection. The BOE states that it will rely on the FCA to regulate custodians but may impose its own requirements if necessary, particularly in relation to Anti-Money Laundering and Know Your Customer requirements for unhosted wallets and off-chain transactions. The BOE PRA letter emphasizes the need to clearly differentiate between “e-money or regulated stablecoins” and other types of deposits to avoid confusion among customers. Deposit-taking institutions are advised to limit their innovation to deposits and use distinct branding for issuance activities. If an issuer wants to take deposits as well, they should involve the PRA in the process. The BOE roadmap includes a timeline with an implementation date of 2025.

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Information	Details
Geography	Europe
Countries	🇬🇧
Sentiment	neutral
Relevance Score	1
People	None
Companies	Anti-Money Laundering, His Majesty’s Treasury, Financial Conduct Authority, Bank of England, Prudential Regulatory Authority
Currencies	None
Securities	None