Launched in 2018 by cryptocurrency company Circle, USDC is now the second largest stablecoin globally, with over $30 billion worth of tokens in circulation.
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LONDON – The United Kingdom is likely to see the introduction of stablecoin regulations within “months, not years,” according to the chief policy officer at cryptocurrency firm Circle.
Dante Dispart, head of global policy at Circle, said he sees the UK soon introducing legislation for stablecoins, a type of cryptocurrency intended to maintain a fixed peg to government currencies such as the US dollar or British pound.
“I think we are within months, not years” of formal regulations for the stablecoin market, Disparte told CNBC in an interview last week during a visit to London.
The Treasury and the Bank of England were not immediately available for comment when contacted by CNBC.
Disparte suggested that the UK's longer approach to introducing laws targeting cryptocurrencies may have been a good thing given events that occurred in 2022, such as the collapse of FTX, a cryptocurrency exchange once worth $32 billion, as well as other industry crises.
“You can also look back, and I think many in the UK and in other countries would argue that they were right because they didn't jump in very quickly and fully regulate the environment and bring it to shore because of all the issues we've seen in encryption over the last few years,” Desparte said. .
However, he added that recently, there has been a sense of urgency to introduce formal regulations for stablecoins, as well as trading in digital assets and other crypto-related activities.
By not setting rules for stablecoins, the UK risks losing out on the benefits of the technology. He added that the UK has some catching up to do with the European Union, which has begun regulating stablecoins under MiCa, or markets in crypto assets. Singapore has also approved formal laws for the stablecoin industry.
“In the spirit of protecting the UK economy from excess risk and cryptocurrencies, there is also a point in time where we end up protecting the economy from the job creation and industries of the future,” Desparte said. “You cannot have the economy of the future unless you have the money of the future,” he stressed.
Among the benefits mentioned by Desparte were innovation in the wholesale banking industry, real-time payments, and the digitization of the British pound.
Officials at the Bank of England are currently exploring whether or not to introduce a digital version of the pound sterling, which the media has previously dubbed “Britcoin.”
Dante said he met with officials from the Bank of England recently and was reassured by their approach to so-called central bank digital currencies, or CBDCs.
What has the UK done so far?
Prime Minister Keir Starmer's predecessor, Rishi Sunak, previously envisioned Britain becoming a global cryptocurrency hub.
When the Conservative Party was in power, UK government officials indicated that new legislation for stablecoins as well as cryptocurrency-related services such as staking, exchange and custody would be implemented as early as June or July.
In April, the previous government announced plans to become a “global leader” in cryptocurrencies, outlining plans to bring stablecoins into the regulatory fold and consulting on a system to regulate the trading of crypto assets, such as Bitcoin.
Last October, the Sunak administration issued a response to a consultation on regulating the cryptocurrency industry, saying it aimed to introduce a “second phase of secondary legislation” in 2024, subject to parliamentary approval.
The new Labor government has not been as forthright as the Conservatives on regulating cryptocurrencies. In January, the party released a plan for financial services, which included a proposal to make the UK a hub for securities tokenization.
Security tokens are digital assets that represent ownership of real-world financial assets, such as stocks or bonds.
Stablecoins are a multibillion-dollar industry, worth more than $170 billion, according to CoinGecko data. Rope USDT The token is the largest stablecoin by value, with a market capitalization of over $120 billion. Circle US dollars It is the second largest currency, with the total value of coins in circulation amounting to more than $34 billion.
However, the market has been surrounded by controversy in the past. In 2022, Tether's USDT price fell from $1 after the collapse of its rival stablecoin, TerraUSD, to zero. The events have raised doubts about whether USDT is actually backed 1:1 by an equal amount of dollars and other assets in Tether reserves.
For its part, Tether says its currency is backed by the dollar and dollar-equivalent assets, including government bonds, at all times.
