The Bank of England (BoE) revealed on Monday that they intend to go ahead with their plans for a system of stablecoins, as revealed in a response to a consultation. The consultation set out that systematic stablecoins would be supervised by both the Bank of England and the Financial Conduct Authority (FCA), which was welcomed by respondents.
Both respondents and the government also supported the extension of the accountability framework (which evaluates whether supervisors' approaches are future-proof) to systematic stablecoins. The paper stated the following:
"Regarding views on the dominance of FMI SAR (the regime) in cases of insolvency of future systemic payment entities, this was widely well received."
The UK released a series of consultations last year outlining that systematic stablecoins would be brought under existing regulation with a new purpose of returning customer funds, along with the aim of ensuring that operations continue, which some respondents were concerned about. The document further added:
Some noted that adding a new target to return customer funds to all systemically important payment entities could lead to situations where this was prioritised over ensuring service continuity to mitigate acute stability risks."
The government said it will continue to work with regulators to review its approach. The UK recently passed the Financial Services and Markets Act 2023 into law, giving the BoE powers to set up a regime for systematic stablecoins.