Cryptocurrency firm Circle expects the UK to introduce stablecoin regulations within months rather than years.
Dante Disparte, head of global policy at Circle, expressed confidence that formal legislation for stablecoins, a type of virtual currency pegged to traditional currencies such as the US dollar or British pound, will soon be enacted. did.
“I think we can get there within months, not years,” Mr. Disparte said in an interview in London. His optimism reflects a growing sense of urgency among policymakers to establish a regulatory framework for digital assets. Disparte believes the UK’s cautious approach to cryptocurrency regulation is beneficial, especially given the recent upheaval in the industry.
The deliberate pace at which the UK introduced virtual currency legislation may have been wise. Disparte said many in the UK felt justified in not rushing to regulate, especially after events like the collapse of cryptocurrency exchange FTX, which was once worth $32 billion. he suggested. “The UK and many other countries will argue that they were justified in not jumping in too quickly,” he pointed out.
The need for regulatory clarity
By not enacting stablecoin-specific regulations, the UK could fall behind regions such as the European Union, which already have regulations in place under the Market for Cryptocurrency (MiCA) framework. Singapore has also enacted formal legislation for the stablecoin industry.
“In the spirit of protecting the UK economy from too much risk and cryptocurrencies, there is a point where it ends up being about job creation and protecting the economy from future industries,” Disparte said.
The launch of stablecoins will help the banking sector. Real-time payments and the digitalization of the British pound could revolutionize financial transactions. The Bank of England is exploring the possibility of a digital pound, also known as ‘Britcoin’. Disparte mentioned meeting with central bank officials and was reassured by their thoughtful approach to central bank digital currencies (CBDCs).
Circle is actively working with the UK authorities to advocate for clear and effective stablecoin regulation. The company’s involvement highlights the importance of collaboration between the private sector and regulators in shaping the future of digital finance.
Previous governments have expressed ambitions for the UK to become a global cryptocurrency hub. Under former chancellor Rishi Sunak, plans were announced to make the UK a “world leader” in cryptocurrencies, with the aim of introducing stablecoin legislation and talks on regulating crypto trading. In April, the government outlined its intention to incorporate stablecoins into its regulatory framework, reflecting its positive stance toward digital currencies.
Current government position
The new Labor government has said less about cryptocurrency regulation than its predecessor. The party published its financial services plan in January, including proposals to position the UK as a hub for securities tokenisation. Securities tokens represent ownership of real-world financial assets, such as stocks and bonds, in digital form. This move marks a shift towards adopting blockchain technology within traditional financial markets.
Stablecoins make up a significant portion of the cryptocurrency market, with a total value of over $170 billion. Tether’s USDT is the largest stablecoin, with a market capitalization of over $120 billion. Circle’s USDC is the second largest, with over $34 billion worth of coins in circulation.
Despite their prominence, stablecoins face controversy. In 2022, Tether’s USDT briefly lost its $1 peg following the collapse of rival stablecoin terraUSD. This event raised concerns about the stability and backing of these digital assets. For stablecoins to gain wide acceptance, it is important to ensure that they are fully backed by reserves. Tether claims that its Tether coins have always been backed by dollar-equivalent assets, including dollars and government bonds.
Introducing strong regulation will increase transparency and trust in the stablecoin market, protecting consumers and investors. As the UK considers its next steps, industry leaders like Circle hope regulations will be enacted soon. The introduction of stablecoin legislation has the potential to position the UK as a leader in digital finance, fostering innovation and attracting investment.
“Without the money of the future, we cannot have the economy of the future,” Disparte concluded, stressing the importance of embracing digital currencies.
