The UK bill follows the European Union's approach to regulating stablecoins.
Her Majesty's Treasury of the United Kingdom has submitted a Bill to regulate stablecoins as a form of payment. This proposal is part of a financial bill broader and more far-reaching, which aims to eliminate hundreds of pieces of legislation that were blocked by the European Union (EU) following Brexit.
El Financial Services and Markets Bill, introduced in the lower house of parliament on Wednesday 21 July, will also give the government new powers to order regulators to review financial rules based on what is deemed to be in the best public interest.
The project will extend the Banking Act 2009 and the Financial Services (Banking Reform) Act 2013 to include “digital settlement assets” (stablecoins) and authorizes the Treasury to regulate assets, payments and their suppliers.
The British bill takes a similar approach to that being considered with the regulations included in the draft Cryptoasset Markets Act (MiCA). Both bills seek to address the alleged Threat that stablecoins pose to financial stability, something that has come to light after the Terra and UST disaster.
However, in the case of the British project, it seeks alleviate the negativity and pressure that European regulations aims to apply to cryptocurrencies. The UK wants to become a global hub for the crypto industry, so its bill seeks to ensure that the country’s regulatory code remains fair and focused on results.
What does MiCA mean for stablecoins?
Specifically, MiCA will force large stablecoin issuers to adhere to strict and prudential rules, applying additional limits that will depend on wider use, and will also apply a limit to 200 million euros in daily transactions.
MiCA also creates “sandboxes” or “sandboxes”, closed testing environments, for analyze the infrastructure of financial markets, which are also included in the UK bill, in an attempt to allow companies to safely and controlledly test new technologies and practices.
These isolated testing environments will enable companies to increase the efficiency, transparency and resilience of new fintech products, including cryptocurrencies.
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