Opinion: The UK is set to regulate stablecoins. It’s clear that tokens are inevitable
Written by Mel Gelderman
Posted on November 9th, 2023
The UK is taking steps to bring stablecoins into the economy as it outlines plans to regulate the nascent market. Mel Gelderman says this shows that tokens are inevitable.
We had big news out of the UK this week, as the Bank of England and Financial Conduct Authority shared plans on regulating stablecoins. The organisations published papers on monitoring “systemic stablecoins” used for payments. This is a signal of token technology’s growing standing in the global economy. It also proves that tokens are here to stay.
UK details plans to regulate stablecoins
The UK government wants to establish a crypto hub. So this news is not unexpected. The BoE and FCA papers focus on stablecoins used for payments. Additionally, they highlight the importance of mitigating risks and propose rules on backing assets. If finalised, stablecoin issuers will need to “prudently manage” backing assets, publish details on those assets, and let users redeem their stablecoins for money. Furthermore, the FCA wants to block stablecoin issuers from paying interest to holders, a decision token fans will surely question.
“Stablecoins will continue to be one of the key drivers of mainstream token adoption.”
Since the token space suffered from events like Terra’s UST collapse, stablecoin regulation has been a big elephant in the room. The European Union has already developed plans to regulate fiat-pegged tokens. The US has been slower to act, but that will definitely change. Once token technology matures, stablecoins will gain massive adoption. That means governments will need to establish rules on ways to regulate them.
Mainstream token adoption 🌍
I’m confident that stablecoins will continue to be one of the key drivers of mainstream token adoption. People will eventually use them to pay for things without realising they’re using token technology. By regulating this market, the UK is hinting that tokens are inevitable. And that’s good news for the future.
Please note: Investing in cryptoassets is risky. Due to the volatile nature of the cryptocurrency market, investors run the risk of losing their funds when they make an investment. Returns from cryptoasset investing are not guaranteed, therefore users should always be aware of the risks.