Solid strategy. The UK will focus first on regulating stablecoins rather then the broader cryptocurrency markets. This has been confirmed by its financial services minister.
The treasury minister was speaking at a City & Financial conference on Tuesday.
John Glen, the Economic Secretary to the Treasury, said that stablecoins could pose a threat to competition. This is doubly true should any major private effort dominate the emerging field, such as the planned Diem.
Announced by Facebook in June 2019 as Libra, the proposal was meant with widespread concern from governments and central banks. Diem is now run by an association that includes Facebook, and the is currently seeking approval in Switzerland.
These stablecoins are designed to avoid the volatility typical of cryptocurrencies like Bitcoin.
Glen said:
“There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services.”
This is not the first time that the United Kingdom Treasury has expressed these concerns.
It released a consultation paper in January to gather feedback on the government’s approach to regulating stablecoins and cryptocurrencies. The idea is to mitigate the risks to consumers by bringing these digital assets under regulatory oversight.
Glen further confirmed that Britain would not hold back innovation or be protectionist when it comes to using distributed ledger technology that underpins cryptocurrencies such as Bitcoin and Ethereum.
Stablecoins have become the largest component of cryptocurrencies by trading volume. And while no globally systemic player has yet to emerge, this is a something that could rapidly change.
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