United Kingdom proposes new Bank of England mandate for stablecoins

The United Kingdom is moving to expand the mandate of the Bank of England to include oversight of digital payment innovations, such as stablecoins and tokenization. HM Treasury has proposed a secondary objective for the central bank to support emerging financial technologies, provided that the primary mission of maintaining financial stability is not compromised.

Under this proposal, the Bank of England would be required to submit annual progress reports to Parliament regarding digital money and payment innovation. This initiative aligns with broader regulatory efforts to establish a clear framework for digital assets.

Regulators, including the Bank of England and the Financial Conduct Authority (FCA), are developing a two-tier regulatory approach. This framework distinguishes between systemic and non-systemic stablecoins, with more stringent requirements for those deemed systemic. Key regulatory focuses include the safeguarding of backing assets, redemption processes, disclosure requirements, and market abuse regimes to ensure transparency and security within the digital asset ecosystem.