The stablecoin regulations that are being proposed for adoption in the UK have generated both goodwill and criticism from the industry as some applaud it while others raise issues regarding treatment of securities tokens and foreign coins.
In November, a few discussion papers on stablecoins regulation published by the Financial Conduct Authority (FCA) and Bank of England (BOE), approached different aspects.
BOC concentrated its attention on the discussion of systemic risks and expected standards at wallet providers, whereas FCAtook a wider approach considering various use cases with considerable accentuation risk– same regulator.
The Association for Financial Markets in Europe (AFME) welcomed the proposals but expressed concerns in two key areas, the licenses to print had authorizations of royal authority.
According to AFME, these tokens that already fit all the criteria for this status in regimes of the United Kingdom should be regarded as securities at every stage and not become subjected to yet other stablecoin legislation.
Moreover, AFME recommends that until the international frameworks for regulating overseas stable coins are set and mature markets exist, oversea stablecoins shall be deferred in regulation.
In spite of the fears, AFME’s managing director for technology and operations James Kemp welcomed the proposals as a “positive step.” It is estimated that stablecoins regulations will be implemented in 2025 whilst they are also seen to introduce clarity regarding token classification by fiscal authorities.
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