UK Parliament Opens Stablecoin Inquiry With Input Due by March 11
The United Kingdom's House of Lords Financial Services Regulation Committee has opened an inquiry into proposed stablecoin regulations from the Bank of England (BoE) and the Financial Conduct Authority (FCA). The committee will examine how the growing use of stablecoins could affect the UK's traditional financial services, including banking and payments, while assessing both the opportunities and risks they present.
According to Baroness Noakes, the committee's chair, the review will determine whether the regulatory frameworks proposed by the BoE and FCA are proportionate responses to market developments. The committee is accepting written submissions from industry experts and the public until March 11 and has scheduled a public hearing for oral evidence.
BoE to Finalize Systemic Stablecoin Rules by End of 2026
As lawmakers begin their review, the Bank of England is moving to establish a formal regulatory regime for systemic stablecoins. Sasha Mills, the BoE's executive director of financial market infrastructure, stated the central bank aims to complete its framework by the end of 2026. The goal is to ensure stablecoins meet the same operational standards as other forms of money in the UK economy.
The proposed rules target "systemic stablecoins," defined as fiat-pegged tokens widely used for payments that could pose a risk to financial stability. These issuers would be required to fully back their tokens with reserves, with at least 40% of those reserves held in a deposit account at the Bank of England. Mills warned that the growth of stablecoins could reduce deposits at commercial banks, leading to a contraction in credit available to the "real economy."
FCA Positioned as Central Crypto Regulator by October 2027
The stablecoin initiative is part of a broader push to regulate the UK's digital asset market. The FCA, which is set to become the country's central crypto regulator, is expected to conclude its consultation on 10 new proposals for the crypto market in March. Full implementation of the wider crypto framework is targeted for October 2027.
This centralized approach, placing authority with the FCA as both the securities and commodities regulator, contrasts with the bifurcated system in the United States, where jurisdiction over crypto assets is divided between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
