The Bank of England (BOE) has extended the deadline for public comments on its stablecoin regulation discussion paper to February 12, providing stakeholders with additional time to submit feedback. The Financial Conduct Authority (FCA) discussion paper maintained the original deadline of February 6. The discussion papers, released on November 6, marked the initial phase of comprehensive crypto-asset regulation in the UK. While the BOE focused on issues related to systemic payment systems and retail-focused stablecoins, the FCA explored various stablecoin use cases, emphasizing auditing, reporting, prudential requirements, and custodianship. Dual regulation may apply to services deemed systemic or providing essential services to payment systems using stablecoins.


The Bank of England (BOE) has granted an extension for public comments on its stablecoin regulation discussion paper, allowing stakeholders to submit feedback until the morning of February 12. The extension provides additional time for comprehensive input on the BOE's approach to issues related to the use of sterling-backed retail-focused stablecoins in systemic payment systems. Meanwhile, the Financial Conduct Authority (FCA) maintained the original deadline of February 6 for its stablecoin regulation discussion paper.

Released on November 6 as part of a joint publication package, these discussion papers represent the initial step in the United Kingdom's journey towards comprehensive crypto-asset regulation. While thematically linked, the BOE's and FCA's papers address stablecoin-related matters from different perspectives.

The BOE primarily focuses on aspects such as transfer functions and requirements for wallet providers, particularly in the context of a sterling-backed retail-focused stablecoin operating within systemic payment systems. On the other hand, the FCA's discussion paper delves into a broad spectrum of stablecoin use cases, with a particular emphasis on auditing, reporting, prudential requirements, and custodianship. The FCA highlights the guiding principle of "same risk, same regulator outcome" in its approach.

Notably, the FCA is set to regulate custodianship, raising the possibility of dual regulation alongside the BOE in cases involving off-chain transactions, anti-money laundering, and Know Your Customer requirements for unhosted wallets. Services deemed systemic or providing essential functions to payment systems using stablecoins may fall under the purview of dual regulation.

The Association for Financial Markets in Europe (AFME) submitted comments to the FCA on time, lauding the UK's proposals as a positive step. However, AFME expressed concerns regarding the treatment of securities tokens, emphasizing that these tokens, which are inherently securities, should receive consistent regulatory treatment throughout their lifecycle.

Stakeholders and industry participants are actively engaging in this regulatory discourse, recognizing the importance of shaping the future regulatory landscape for stablecoins in the UK. The regulations, expected to be enforced in 2025, aim to establish a robust framework for the evolving crypto-asset ecosystem.

(TRISTAN GREENE, COINTELEGRAPH, 2024)