Yesterday, Transatlantic Task Force for Future Markets published a statement On an ongoing initiative to coordinate the evolving digital asset regulatory landscape of the United Kingdom and the United States. By working together, two leading financial jurisdictions can guide the rest of the world on how to regulate cryptocurrency. Partnership makes sense, and well-established communication channels between the two governments can help develop a framework that will benefit both parties.
A policy paper has been published regarding the fundamental issue with stablecoins, or privately issued digital currency, which are mostly used for value transfer and payments. The following statements were made in the joint statement:
“Both governments recognize that well-regulated stablecoins have the potential to promote efficiency and competition in our financial systems, modernize financial market infrastructure, and improve cross-border payments and transactions. Both governments recognize the importance of promoting competition and innovation in a financial ecosystem that includes multiple forms of money, preserving financial stability, protecting consumers, and maintaining public confidence in money.”
The two parties issued “joint views” on stablecoins as follows:
- UK and US confirm stablecoins as important vehicle for digital currency innovation
- The UK and US aim to encourage competition and innovation through policies that facilitate the coexistence and circulation of different digital currency solutions.
- The United Kingdom and the United States aim to develop a timely, clear and consistent legal, regulatory and supervisory pathway for digital financial innovation, including stablecoins.
- The UK and US confirm that stablecoins held as money must be fully backed by high-quality, liquid assets, at least on a one-to-one basis.
- The UK and US confirm that reserve, liquidity and other prudential requirements for stablecoins should be aimed at reducing risks and preventing unnecessary fragmentation.
- The United Kingdom and the United States aim to advance regulatory approaches that encourage innovation and resilience without imposing burdensome restrictions that undermine business sustainability, create barriers to entry, or inhibit competition.
- The United Kingdom and the United States support the integration of well-regulated stablecoins into activities including settlements, settlements, and tokenized financial markets.
- The UK and the US aim to set high standards for storing, segregating and protecting stablecoin reserves.
- The United Kingdom and the United States support clarity, predictability and cross-border coordination in the event of a possible failure of a stablecoin issuer.
- The United Kingdom and the United States confirm the importance of formal mechanisms enabling cross-border stablecoin activity as a feature of domestic regulatory and supervisory regimes
Neo CEO Laurent Descout He said the statement published on Mansion House shows that stablecoins should be fully backed by high-quality assets. It will also increase trust in digital assets and cross-border financing.
“The UK and US commitment to support well-regulated stablecoins is welcome. Adoption has grown rapidly and stablecoins are increasingly integrated into settlements, payments and global treasury infrastructure,” Descout said. “Stablecoins could make international payments faster and more efficient, but wider adoption will depend on open, interoperable regulations that prevent fragmentation across markets.”
The priority now is to put these common principles into practice.
