Expert Foresees Joint Use of Stablecoins and CBDCs in the UK

Regulatory authorities in the United Kingdom are collaborating to establish comprehensive regulations for the cryptocurrency market in alignment with the MiCA regulation. Former fintech department head of the Bank of England (BoE), Varun Paul, revealed that the UK Treasury, the Bank of England, and the Financial Conduct Authority (FCA) are working towards this common regulatory framework.

Varun Paul suggested the possibility of cryptocurrencies, stablecoins, and CBDCs being used together in the country. The aim is to develop unified regulations in accordance with the Market in Crypto Assets (MiCA) regulation.

While the UK is progressing with synchronized regulatory norms, Ukraine is also aligning its cryptocurrency regulations with European standards. However, regulatory positions on this matter differ. The National Securities and Stock Market Commission of Ukraine has stressed the need for synchronizing European regulations with Ukrainian norms. On the contrary, the Ministry of Digital Transformation presented an alternative bill for regulating the crypto market, expressing concerns about the full implementation of MiCA in Ukrainian legislation.

The regulatory responsibilities in the UK extend to stablecoins under the FCA's jurisdiction, while the Bank of England will oversee the operations of "larger and systemically important operators."

Despite the growth of stablecoin market capitalization to $140 billion by the end of February 2024, concerns persist regarding the transparency of Tether reserves, the issuer of the USDT stablecoin, among British regulators. USDT continues to dominate this sector with a market share exceeding 70%.

By coordinating efforts among the three regulatory bodies, it becomes feasible to establish a set of rules permitting the use of stablecoins, tokenized deposits, and digital bank currencies, as highlighted by the expert statement.