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The UK embraces stablecoins

Photo of: Joseph Stone
by Joseph Stone

A consultation paper published yesterday by Her Majesty’s Treasury, a department of the British government, explores the scope of regulation applicable to stablecoins. The paper also highlights the potential role in the wider economy that Stablecoins will play in the near future.

The institution invites all local players in the cryptocurrencies market to respond to this consultation, with the aim of developing a balanced and fair regulation.

Indeed, Her Majesty’s Treasury does not seek to curb the development of the Stablecoins, on the contrary:

“If the appropriate standards and regulations can be met, some stablecoins could play a significant role in retail and cross-border payments (including settlements). This means that they could provide benefits … such as speed, efficiency and resilience.”

The Government also points out that some Stablecoins could support financial inclusion and economic growth, both domestically and across borders.

The paper states that the Covid-19 pandemic has greatly accelerated the use of digital forms of payments, a feature that could increase the attractiveness of the Stablecoins for remittances.

Last month, the payment giant Visa entered into a collaboration with Circle, one of the companies behind the USDC stable coin. This partnership allows all Visa card issuers to integrate the sending and receiving of USDC payments.

Yes, Her Majesty’s Treasury appreciates stablecoins and sees significant potential in them. However, their development in the territory will only take place with the deployment of a dedicated regulatory framework.

Eventually, the stablecoins could then benefit from their own legal classification, differentiated from other cryptocurrencies. For the time being, the UK government’s true intentions regarding these cryptographic assets have not been clarified. However, with such a positive approach towards stablecoins, the UK should probably remain lenient towards them.

The British government now has all the cards in hand to help develop these assets, and not to let its chance go by, as may be the case for other countries.

At the time of writing, the market for stablecoins is worth more than $32 billion. The use cases for these assets are developing rapidly and have become a must-have in any portfolio.

Another recent major advance is that all banking institutions in the United States can now use stablecoins to make payments, while exploiting the nodes of the blockchains that host them.

The beginning of a new era for stablecoins is approaching and seems inevitable. This asset class is of great interest to governments, and they are counting on it.