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The FCA and Bank of England publish proposals for regulating stablecoins

What has happened? 

In November 2023, the FCA and the Bank of England requested feedback on their proposed approach, set out in their respective Discussion Papers, to regulating stablecoins. The Bank’s proposals cover any future payment systems that use stablecoins in the UK on a systemic scale.

What are the key points of the summary?

.Stablecoins are a new type of digital asset that will aim to maintain a stable value and could be used for retail payments in the future.

The proposed regulatory approach put forward by the FCA and the Bank seeks to harness the potential benefits that stablecoins could provide to UK consumers and retailers, in particular by making payments faster and cheaper. The proposals to regulate stablecoins aim to protect consumers, to prevent money laundering with a robust set of rules and to safeguard financial stability.

The FCA’s Discussion Paper DP 23/4 explores the proposed regulation around issuing and holding stablecoins that claim to maintain a stable value relative to a fiat currency by holding assets denominated in that currency.

The Bank’s Discussion Paper outlines how the Bank of England would regulate operators of systemic payment systems using stablecoins, that is, payments systems which, if widely used for retail payments in the UK, could otherwise pose risks to financial stability. The Bank would also regulate other entities providing services to these payment systems, such as stablecoin issuers and wallet providers, where they could otherwise pose financial stability risks.

The PRA has published a Dear CEO letter on how it expects deposit-takers to address the risks that arise from issuing multiple forms of digital money, while welcoming the benefits that could come from innovation in this area. The letter also sets out the PRA’s broader expectations for banks regarding their use of digital money for retail or wholesale innovations, in areas such as operational resilience, anti-money laundering, counter-terrorist financing, and liquidity and funding risks.

The FCA, the Bank and the PRA have also published a cross-authority roadmap paper on innovation in payments and money, which explains how UK authorities’ current and proposed regulatory regimes for issuers of different forms of digital money or money-like instruments will interact.

Firms in this space should also refer to the HM Treasury document Future financial services regulatory regime for cryptoassets - Response to the consultation and call for evidence, which covers stablecoins in detail.

How can we help you? 

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Are you looking for help with your stablecoin arrangements, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to