In a long-awaited update on its plans for the UK’s crypto regulatory framework, on 30 October 2023, HM Treasury issued three interlinked policy documents on the future regulation of crypto, covering fiat-backed stablecoins, the wider cryptoasset regulatory regime, and the failure of systemic digital settlement asset firms. The UK regulators followed shortly after, issuing a set of discussion papers and documents on 6 November 2023 on the forthcoming stablecoin regime, setting out their initial views on proposed regulatory requirements. This marks the latest step in the UK’s attempt to position itself as a hub for the digital assets industry, via a robust, responsive regulatory system which purports to be based on a “same risk, same regulatory outcomes” philosophy.
The Treasury’s stablecoin policy update sets out more detail on the government’s plan to regulate certain activities relating to fiat-backed stablecoins, almost 18 months after it first confirmed its plans to move forward with the regulation of stablecoins in the UK. Whilst the update essentially confirms the approach previously set out by the Treasury, there are some evolving details and clarifications worth exploring. However, whilst the Treasury intends to bring forward secondary legislation by early 2024 (subject to available parliamentary time), it remains the case that most of the detailed requirements of the regime are left to the forthcoming secondary legislation and rules issued by the regulators. The discussion papers from the Financial Conduct Authority and Bank of England give a helpful indication of how the finer details of the regime will shake out, but there is plenty of room for the regulators to manoeuvre, and further consultations to follow before the shape of regulation is fully set. We review the Treasury’s policy update and the discussion papers from the UK regulators in our full alert.
The Future of UK Stablecoin Regulation – Treasury and Regulators Provide More Detail on Approach
Mark Simpson is a partner in the Financial Services & Regulatory Group in the London office where he practices in the areas of financial regulation, financial crime, and regulatory investigations. He is a member of the Firm's EMEA Financial Services & Insurance Steering Committee, as well as its Global Funds and FinTech Groups. He participates actively in industry bodies including the Alternative Investment Managers Association. He has authored a number of articles and other publications, most notably acting as a general editor of and contributor to the International Guide to Money Laundering Law and Practice, and A Practitioner's Guide to the Law and Regulation of Financial Crime.
Sarah Williams is an associate in the financial services practice in London. Sarah advises a broad range of clients on financial services legal and regulatory issues. Sarah's practice includes advising on the regulation of payment services and electronic money, investment firms and consumer credit providers and anti-money laundering compliance issues.
Melody Hoay is an associate in the Financial Services & Regulatory Group in the London office. Melody's regulatory experience covers payments, cryptocurrency, ESG, capital markets, asset management, financial advisory and anti-money laundering work in the UK and Singapore. Prior to joining Baker McKenzie, Melody practised law at one of the largest leading law firms in Singapore in the financial regulatory and fintech team, and through that capacity was also a member of the legal team sitting on the ExCo of the Singapore FinTech Association in 2021. Melody has also given various talks on financial regulation, including two guest lectures on cryptocurrency regulation at a Singapore university. Melody graduated from the University of Oxford with a B.A. (Hons) in jurisprudence in 2017. She also topped the national Singapore Bar Examinations in 2019 and qualified in Singapore.
Kimberly Everitt is Baker McKenzie's knowledge lawyer for Financial Services Regulation & Enforcement, covering the EMEA region, and brings over a decade of experience to the team in both knowledge and fee-earning roles. Prior to joining Baker McKenzie, Kim held roles specializing in contentious financial services regulation knowledge, and her fee-earning roles covered non-contentious regulation in the private equity and general financial services sectors.