Response to the Bank of England’s discussion paper on the regulatory regime for stablecoins

Response to the Bank of England’s discussion paper on the regulatory regime for stablecoinsLink opens in a new window

February 2024

The rise of stablecoins and their future in payments

Stablecoins have emerged as a new form of digital asset that purports to maintain a stable value against a fiat currency (such as the US dollar or pound sterling). They have been a pivotal innovation for the digital asset ecosystem, where they are widely used as a means of payment (as a settlement asset) in the trading of other digital assets (e.g. Bitcoin).

Potentially, however, some sort of stablecoins could in future become widely adopted for use in retail payments and the general economy.

Implications of stablecoin adoption in payments

Whether this sort of adoption happens will depend in part on stablecoins' attractiveness as a means of payment and store of value, but it would have wide-ranging implications. Consumer protection, financial stability, and the broader implications for monetary policy and the banking sector (where money is currently created and managed today) need to be considered.

Regulatory response - shaping the future of money, payments and finance

The rapid rise of stablecoins (and some dramatic collapses) is thus prompting authorities around the world to move to regulate stablecoins. The choices they make will play an important role in moulding the future of money and payments and finance more broadly.

In the EU, new regulations on stablecoins (under MiCA) will come into force this year. In the UK, recently legislative changes have brought sterling stablecoin issuers within the remit of the FCA and extended the remit of the Bank of England on systemic payment systems to include stablecoins and related service providers.

The BoE have issued a discussion paper setting out its plans on the regulatory framework for systemic stablecoins backed by fiat currency and associated service providers.

 Our comprehensive responseLink opens in a new window

At The Gillmore Centre, we have engaged thoroughly with the Bank of England’s discussion paper. Our response encapsulates a comprehensive analysis and constructive insights on the establishment of a robust, equitable, and forward-looking regulatory framework.

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