Global: UK Treasury unveils plan to regulate stablecoins in Financial Services and Markets bill

The UK unveiled its Financial Services and Markets bill in Parliament on Wednesday – a set of legislation that includes guidelines on the safe adoption of cryptoassets.

Nadhim Zahawi, who stepped into the role of chancellor earlier this month following Rishi Sunak’s resignation, said that, under the bill, stablecoins and so-called “digital settlement assets” would be regulated as a form of payment in the UK.

“In fostering these new innovations, the Bill will also enable the creation of Financial Markets Infrastructure Sandboxes – allowing firms to test the use of new technologies and practices in financial markets, increasing efficiency, transparency and resilience of new products,” the Treasury said in a press release.

The bill states that the government will have to consult the Bank of England, the PRA and the FCA before changes are made.

The bill, which repeals hundreds of pieces of EU retained law, is controversial in the UK as it paves the way for ministers to “call in” regulatory decisions made by the Bank of England. Zahawi has taken Sunak’s mantle in this regard while also pushing for an approach to City regulation focused on growth.

The bill will have to be passed by lawmakers in both the House of Parliament and the House of Lords to be written into UK law.

Sunak’s approach while in office had included an open stance on cryptoassets. In April, he had started the process of looking at how stablecoins would be regulated and commissioned NFTs to be released by the Royal Mint this summer.

Lawmakers have also been courting crypto companies and VCs in recent months. UK Treasury disclosures for the first quarter of 2022, unearthed by The Block, revealed Sunak and former economic secretary John Glen took a number of meetings between top officials and crypto companies.

The HMT Ministers’ Meetings log, published on the UK government website, shows that Glen had meetings in February and March with crypto firms including Binance, Paxos, Coinbase and Circle, with the intention to “discuss cryptoassets.”

Meanwhile, Sunak met with Sequoia managing partner Douglas Leone to “discuss the UK’s Venture Capital sector.”

Sunak is currently running to lead the Conservative Party. Should he win the leadership contest, he would become the UK’s next prime minister.