Cryptocurrencies have become a major aspect of the financial landscape across the world. The decentralised nature and quick transactions has seen an increase in adoption in recent years with leading coin Bitcoin has the major beneficiary.
This success and the threat of cryptocurrencies to traditional fiat currencies has brought about a wave of government interest in virtual currencies. The highly controversial Facebook Libra has also caused concerns for central banks across the globe with many putting plans to launch digital currencies.
UK government begin consultation about launching a stable coin
The United Kingdom is one of the latest to maul the idea with its financial watchdog the bank of England set to begin developments on a stable coin CBDC.
The bank recently released a discussion paper on the new stable coin highlighting the benefits and features of the currency.
It is also expected that the idea will enhance secure and cost-effective online transactions, which in turn will boost business and the digital economy. The stablecoin would make the UK financial system safer as it would be running on distributed ledger technology.
The apex bank called on consultations from the public with regards to the project. In a related publication on the UK budget, the apex bank revealed that part of the quest for stablecoins was to bring innovation in crypto assets.
“To protect consumers and support innovation in cryptoassets, the government intends to consult on a measure to bring certain crypto assets into the scope of financial promotions regulation.”
UK recently clarified the stance of cryptocurrencies which favours BTC
The creation of a stable coin by the bank of England is unlikely to have any detrimental effects on popular cryptocurrencies like Bitcoin and Ethereum. In fact, it could favour both coins following the recent clarification of the assets by the Financial Conduct Authority
The regulatory body issued a guidance in 2019 that declared that any token that is not a security token or e-money token is unregulated. This basically means that holders of cryptocurrencies like Bitcoin and Ethereum can trade from the European country without the fear of backlash from regulatory authorities.
The only requirement issued by the guidance was that traders must adhere with KYC rules which many UK crypto exchanges mandate for users.