BoE Governor Calls for Setting Global Standards for Stablecoins, Instead of Playing Catch Up
Stablecoins have been enjoying tremendous growth, and DeFi mania has only been pushing it further, so much so that these USD-pegged coins have been adding $100 million per day since mid-July.
“DeFi yields/interest rates are clearly a vacuum sucking in a lot of stablecoins,” shared Coin Metrics co-founder Nic Carter.
As such, it makes sense these coins will continue to be under the increased scrutiny of regulators, which first came under their radar after Facebook unveiled its Libra stablecoin last year.
Now, Bank of England Governor Andrew Bailey is saying that financial regulators must avoid playing catch up with them. Bailey said in a speech to the Brookings Institution,
“If stablecoins are to be widely used as a means of payment, they must have equivalent standards to those that are in place today for other forms of payment types and the forms of money transferred through them.”
Calling for a clear G20 mandate for standard-setting bodies to clarify or refresh standards, he said existing regulatory standards must be examined and updated as necessary in the light of stablecoins. He said in the prepared speech,
“Regulators of global stablecoins must, and are, working with other regulators in other jurisdictions to ensure that they are appropriately regulated and gaps in coverage, opportunities for regulatory arbitrage, do not emerge.”
Any stablecoin which is based on the pound and launched in Britain should meet standards that are applied to banks, Bailey said. Also, the issuer of the stablecoin needs to be based in the country, he added.
“If a sterling retail stablecoin wishes to operate at scale in the UK, then we will strongly consider the need for an entity to be incorporated in the UK.”
Meanwhile, central banks have taken to work on their own state-owned digital currencies. China is already in the testing phase of its DC/EP, and Japan is also making digital yen its priority while both the BOE and US Federal Reserve have taken a cautious approach towards launching their central bank digital currency.