The Financial Conduct Authority has launched a stablecoin-specific cohort in its regulatory sandbox.
In a speech last week, David Geale, executive director for payments and digital assets at the FCA, said the sandbox will provide innovative firms with a “unique chance” to test their stablecoin products and services, potentially driving new ideas to benefit both wholesale and retail customers.
“This truly is a very exciting and groundbreaking initiative. It supports agile policymaking and industry development and gives firms the unique opportunity to provide us with practical feedback,” Geale said.
Geale acknowledged that cryptoassets and stablecoins are moving towards becoming mainstream, with a growing need for regulation, and said the FCA is at a “crossroads” as it works to bring crypto within its scope.
“We want the UK’s crypto and stablecoin markets to be one that is well-balanced, enables innovation and is underpinned by integrity and trust,” he explained. “While we are reliant on legislation to bring this to life, we are working at pace to build a proportionate, sustainable regime that works.”
Geale said the FCA wants to build a regime that is competitive, allowing consumers to make informed decisions and understand what they are getting into, at the same time as fostering an environment that firms want to do business in.
The FCA will use the results of the sandbox to influence how it approaches disclosure requirements. Applications are open to firms until 25 January.
It is set to finalise its rules on crypto next year, which Geale said will be “strong and clear” and serve as the foundation of its regime.
He added: “Transparency is critical. Proper information on what investors stand to gain – and the risks they face – must remain in place. Some say risk warnings put consumers off investing in crypto. We say they help them make more informed decisions.
“We are also considering developments in the market outside of our crypto roadmap and continue to have open discussions with industry about our policies.”
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