The two countries have been ramping up their efforts related to the regulation of stablecoins because both countries are in the process of refining their regulations concerning digital assets. A delegation from HM Treasury and US Treasury met in London on July 8 for the 13th session of the Financial Regulatory Working Group between the UK and US. The participants in this meeting included members from the Bank of England, FCA, Federal Reserve, SEC, CFTC, FDIC, and OCC. No proposals of rules were made in this meeting, only alignment of regulatory principles.
Stablecoins Go from Law to International Cooperation
Digital finance continued to be at the heart of the London summit of US and UK regulators. Where US regulators provided an update on the implementation of the GENIUS Act. This introduces the federal framework for payment stablecoins, as well as broader digital assets market reform. The British regulators provided information on the progress made in the development of Wholesale Financial Markets Digital Strategy, as well as the designation of Christopher Woolard as Wholesale Digital Markets Champion.
The regulators also discussed tokenization, payment innovations, and G20 Cross-Border Payments Roadmap. Both countries confirmed their commitment to responsible development of digital assets and consumer protection and financial stability in this area. At the same time, they support stablecoins backed one-for-one with liquid assets.
Restrictions Relaxed by Bank of England
Although the UK is still working on its stablecoin regulations, the Bank of England has already made some changes based on consultations with the industry. For instance, it decided to abandon the initial proposal to place limits on the number of coins an individual user could hold. Moreover, the Bank of England decided to implement a temporary cap on issuance of systemic stablecoins at £40 billion per year.
In addition, it changed the proportion of assets that should be kept as non-interest-bearing deposits at central banks. Initially, it was proposed to hold 40% of assets in this way; now the amount is 30%. Thus, 70% of reserves could be held in UK government bonds. These regulatory changes make the UK closer to the new transatlantic approach to stablecoin regulation.
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