Launched in 2018 by crypto company Circle, USDC is now the second-largest stablecoin in the world, with over $30 billion worth of tokens in circulation.
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LONDON — The United Kingdom will likely see the introduction of stablecoin laws in “months, not years,” according to the top policymaker at crypto firm Circle.
Dante Disparte, Circle’s global head of policy, said he anticipated the UK would soon pass legislation on stablecoins, a type of cryptocurrency that aims to maintain a constant peg to government currencies such as US dollar or pound sterling.
“I think we are a few months away, not a few years away” from introducing formal laws for the stablecoin market, Disparte told CNBC in an interview last week during a visit to London.
The Treasury and the Bank of England were not immediately available for comment when contacted by CNBC.
Disparte suggested that the UK’s longer approach to introducing targeted crypto laws might have been a good thing given events in 2022, such as the collapse of FTX, a crypto exchange once worth 32 billion of dollars, as well as other industrial crises.
“You can also look back, and I think many in the UK and other countries would say they are right in not having acted too quickly and not fully regulating and bringing the environment back on track. territory because of all the problems we have seen in crypto over the last few years,” Disparte said.
However, he added that more recently there has been a sense of urgency to introduce formal regulations for stablecoins, as well as digital asset trading and other crypto-related activities.
By failing to develop stablecoin-specific rules, the UK risks missing out on the benefits of the technology. He added that the U.K. has some catching up to do with the European Union, which has begun implementing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulations. Singapore has also passed formal laws for the stablecoin sector.
“In the spirit of protecting the UK economy from excessive risk and crypto, there is also a point where you end up protecting the economy from job creation and industries of the future,” Disparte said. He stressed that “you can’t have the economy of the future if you don’t have the money of the future.”
Among the benefits cited by Disparte are innovation in wholesale banking, real-time payments and the digitalization of the pound sterling.
Bank of England officials are currently considering whether to introduce a digital version of the pound sterling, previously dubbed “Britcoin” by the media.
Dante said he recently met with Bank of England officials and was reassured by their approach to central bank digital currencies, or CBDCs.
What has the UK done so far?
Prime Minister Keir Starmer’s predecessor, Rishi Sunak, previously envisioned Britain becoming a global crypto hub.
When the Conservative Party was in power, UK government officials had signaled that new legislation on stablecoins as well as crypto-related services such as staking, trading and custody would be in place as early as June or July.
In April, the former government announced plans to become a “global leader” in crypto, outlining plans to bring stablecoins into the regulatory fold and consult on a trade regulatory regime crypto-assets, such as Bitcoin.
Last October, Sunak’s administration released a response to a consultation on crypto industry regulation, saying it would aim to introduce “secondary phase 2 legislation” in 2024, subject to the approval of Parliament.
The new Labor government has not been as vocal as the Conservatives on crypto regulation. In January, the party published a plan for financial services, which included a proposal to make the UK a hub for securities tokenization.
Securities tokens are digital assets that represent ownership of a real financial asset, such as a stock or bond.
Stablecoins are a multi-billion dollar industry, worth more than $170 billion, according to data from CoinGecko. Attached USDT The token is the largest stablecoin by value, with a market capitalization of over $120 billion. The circle USDC is the second largest, with a combined value of coins in circulation worth over $34 billion.
However, the market has been surrounded by controversy in the past. In 2022, Tether’s USDT fell from its $1 level after a rival stablecoin, terraUSD, crashed to zero. The events raised doubts about whether USDT was truly backed 1:1 by an equal amount of dollars and other assets in Tether’s reserves.
For its part, Tether claims that its coin is backed at all times by dollars and dollar-equivalent assets, including government bonds.
