The United Kingdom is looking to regulate the fast emerging stablecoin market before it addresses the broader crypto-asset sector, according to a report by Reuters.
Citing John Glen, MP, Economic Secretary to the Treasury, who was speaking at a conference, the report indicated concern about the rise of private currencies tied to fiat or other assets.
In January of 2021, the UK government launched a consultation on both cryptocurrency as well as stablecoins. At that time, Glen stated:
“The UK has long been recognised as a world-leader in financial technology [Fintech]. We are committed to maintaining this position. In practice, that means creating a regulatory environment in which firms can innovate, while crucially maintaining the highest regulatory standards so that people can use new technologies reliably and safely. This is essential for confidence in the financial system more broadly.”
But the advent of Diem, formerly known as Libra, a stablecoin initiative launched by Facebook but now supported by a handful of firms, has rattled policymakers around the world. The thought of a global network the size of Facebook offering its own crypto caused finance ministers, regulators and elected officials around the world to consider what this would mean for central banks and fiat currency.
Currently, stablecoin projects like USDC or Tether have market caps in the billions of dollars. In the last 24 hours, according to Coinmarketcap, Tether saw trading volume of over $105 billion. Both Tether and USDC are tied to the US dollar.
Glen said in the report:
“We need to manage risks to competition. There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services. We believe the case for intervention in the wider cryptocurrency markets is less immediately pressing.”
He added that they had a once in a lifetime chance to “make vast strides” in financial services due to Fintech.
Speaking at the same venue, FCA official Alex Roy admitted the e-money regime “isn’t a perfect match for crypto” alluding to the potential for a bespoke regime.
Meanwhile, responses for the consultation were due on March 21st, indicating that a report should arrive within the coming months.