Innovate Finance has published a blueprint to make the UK the leading international market for stablecoin.
The report, entitled Stablecoin: The UK Opportunity, outlines how the UK can become the most attractive jurisdiction in the world for issuing and using stablecoins while maintaining high standards of financial stability, transparency and consumer protection.
Stablecoins are digital tokens backed by traditional currencies and are already a $200bn global market. The currency is expected to underpin major future innovations in payments, artificial intelligence and financial infrastructure.
Due to their efficiency and cost saving, programmability and transparency benefits, they are primed to revolutionise areas such as international payments and supply chain management all the way to consumer applications.
The industry body for UK fintech published the blueprint through its Digital Point Foundation programme, and suggested that with its global financial footprint and regulatory credibility, the UK is well positioned to lead.
Innovate Finance suggests that the UK has a unique opportunity to “capitalise on the flexibility that Brexit offers” and move ahead with a stablecoin regime that is “more friendly towards innovation”.
Janine Hirt, chief executive of Innovate Finance, said that the UK risks missing out without prompt action. “Without decisive and urgent action, the UK risks missing a significant window of opportunity,” she said. “As the fourth most traded currency globally and home to nearly 40% of FX turnover, GBP is a natural anchor for global stablecoins. It’s not unrealistic to suggest the UK could capture 10–20% of this market.
This report has been published as both the US and EU have developed stablecoin regimes that are either live or on the cusp of being legislated.
Hirt added: “Despite other jurisdictions moving earlier, the UK has the advantage of learning from their gaps.
“This plan sets out a clear, comprehensive regime to ensure stablecoins support economic growth, unlock innovation in payments and AI, and cement the UK’s role as the global centre of digital finance.
“By acting now, the UK can position itself as the global centre for digital assets, and not only benefit from stablecoin as a drive of growth itself, but also as a key enabler of other digital markets.”
The report said the development of a pound-backed stablecoin must be done in a way that is compatible with the international market. Under the proposed framework, stablecoins denominated in other currencies will be issued and used freely in the UK to allow for seamless cross-border payments.
The framework also called for commercial incentives to be promoted in the form of yield and interest offerings as well as a bespoke regulatory regime for stablecoins outside of existing policy governing electronic money and broader cryptoassets.
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