Founded in 2018 by cryptocurrency company Circle, USDC is currently the second largest stablecoin in the world, with over $30 billion of tokens in circulation.
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LONDON — Stablecoin legislation is likely to be introduced in the UK within “months, not years”, according to the head of policy at crypto firm Circle.
Dante Disparte, head of global policy at Circle, said the UK will soon introduce legislation on stablecoins, a type of virtual currency that aims to maintain a certain peg with government currencies such as the US dollar and the British pound. He said he expected to submit the following.
“I think it will be months, not years” before formal legislation for the stablecoin market is introduced, Disparte told CNBC in an interview during a visit to London last week.
The Treasury and the Bank of England did not immediately respond to inquiries from CNBC for comment.
Disparte said the UK will take a long time to introduce legislation targeting cryptocurrencies, given the events that occurred in 2022, including the collapse of cryptocurrency exchange FTX, once worth $32 billion, and other industry crises. He suggested that taking a broader approach may have been a good thing.
“You can look back and see that a lot of people in the UK and other countries were quick to jump in and completely regulate and not bring the environment onto land because of all the problems we’ve seen. “I would argue that this is justified,” said Disparte. “Cryptocurrency has become more popular in recent years.”
However, he added that there has recently been a growing sense of urgency to introduce formal regulation of stablecoins, as well as digital asset trading and other crypto-related activities.
By not developing stablecoin-specific rules, the UK risks missing out on the benefits of the technology. He added that the UK is catching up with the European Union (EU), which has started tightening regulations on stablecoins under the MiCa (Markets in Cryptoassets) Regulation. Singapore has also agreed to 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 we end up protecting the economy from job creation and future industry,” Disparte said. He emphasized that “if you don’t have the money of the future, you can’t have the economy of the future.”
Benefits cited by Disparte include innovation in the wholesale banking industry, real-time payments and the digitalization of the British pound.
Bank of England officials are currently considering whether to introduce a digital version of the pound, previously referred to by the media as ‘Britcoin’.
Dante said he recently met with officials from the Bank of England and was reassured by their approach to so-called central bank digital currencies (CBDCs).
What has Britain done so far?
Chancellor Keir Starmer’s predecessor Rishi Sunak previously envisioned the UK becoming a global crypto hub.
When the Conservative Party was in power, British government officials warned that new laws on stablecoins and crypto-related services such as staking, exchange and custody would come into force as early as June or July. It was suggested that he was deaf.
In April, the previous government announced plans to become a “world leader” in cryptocurrencies, bringing stablecoins under its regulatory framework and planning to discuss a system to regulate transactions in cryptoassets like Bitcoin. was outlined.
Last October, Sunak’s government published its response to a consultation on the regulation of the cryptocurrency industry, saying it aimed to introduce “second stage secondary legislation” in 2024, subject to parliamentary approval.
The new Labor government has been less proactive than the Conservatives on cryptocurrency regulation. The party unveiled its financial services plan in January, including proposals to turn the UK into a securities tokenization hub.
Securities tokens are digital assets that represent ownership of real-world financial assets such as stocks and bonds.
Stablecoins are a multi-billion industry, valued at over $170 billion, according to data from CoinGecko. Tether’s USDT token is the largest stablecoin by value, with a market capitalization of over $120 billion. Circle’s USDC is the second largest, with a total value of more than $34 billion in coins in circulation.
However, the market has been mired in controversy in the past. In 2022, Tether’s USDT fell from its $1 peg after rival stablecoin terraUSD collapsed to zero. This incident raised questions about whether USDT was truly backed 1:1 by an equal amount of dollars and other assets in Tether’s reserves.
Meanwhile, Tether says its coins are always backed by dollars and dollar-equivalent assets, including government bonds.
