Stablecoins Revisited Following UK’s Plan to Thrust Them Into Global Financial Fold

“Today…I can confirm that we will be legislating to bring certain stablecoins into our payments framework…to operate and grow in the UK.” — Keynote Speech by John Glen, Economic Secretary to the Treasury (April 4, 2022)

This is huge: not just because it could pave the way for the UK to be a hub for crypto-related activities, but for its tendency to make stablecoins gain wider use globally with a far-reaching impact on digital assets.

Individual and institutional traders, merchants, and even crypto exchanges like ProBit Global will benefit from the UK government’s latest decision to promulgate policies that will be favorable towards stablecoin issuers and service providers within its territory.

ProBit Global’s latest fiat payment rail enables users to buy stablecoins such as USDT with a credit card, SEPA payments, and UK Faster Payments.

The pro-crypto stance from the UK government follows the agenda set before a public consultation held last January when it confirmed its intention to bring certain stablecoins used as a means of payment into the mainstream financial fold.

Public views on the proffered approach to crypto asset regulation were sought out in Jan 2021, particularly regarding stablecoins benefits and risks to consumers and stability.

The agenda moved a notch higher upon the Economic Secretary to the Treasury John Glen’s declaration at the April 4 Innovate Finance Global Summit that the stage was all set.

“We consulted, last year, on how to regulate so-called ‘stablecoins’, which some companies are keen to develop for payment purposes,” Mr. Glen said.

“Today, we’re publishing our response… as part of which I can confirm that we will be legislating to bring certain stablecoins into our payments framework… creating the conditions for stablecoin issuers and service providers to operate and grow in the UK.”

According to Bloomberg, the total market cap of stablecoins, including USDT and USDC, is about $180 billion as of February 2022 following a 480% YOY increase from $38 billion. With the uncertainty rocking the global economy, a repeat of this increase in a similar fashion could see the combined value of all stablecoins touch the $1 trillion mark. It seems a huge number but not impossible.

USDC alone, as of April 4, has transacted a total of $51.8 billion. Notably, USDC has had its share in the crusade to be a recognized stablecoin at a national level or more specifically, the US.

Last year, its CEO, Jeremy Allaire touched on how Circle, the issuer of USDC, has been set out to become a US federally-chartered national commercial bank built on digital currency technology.

The multiplier effect of the UK’s move could have several interpretations.

Most importantly, stablecoins could gain global legitimacy. With the UK’s plan, stablecoins could become part of the overall global financial ecosystem — particularly in this era of central bank digital currencies (CBDCs) — rather than an outlier.

From China to The Bahamas, Nigeria, or even India, the question of how the plethora of CBDCs are going to be interoperable when more digital versions of fiat currencies flood the market is still being debated. Stablecoins could come in handy to be the universally-usable medium for connecting CBDCs conveniently from various parts of the world.

While the UK strives to be at the forefront of innovation and bring recognition to stablecoins, bringing these tokenized versions of reserve assets pegged to fiat currencies as a payment method is a big push for the efforts to reach the confluence between traditional finance (TradFi) and decentralized finance (DeFi).

It is particularly significant with the implementation of the FSB high-level ​​recommendations still at an early stage and global financial regulators locked in their assessment of whether and how existing international standards and principles may apply to global stablecoin arrangements in different parts of the world.

As Mr. Glen notes in his speech that the legislation they are about to introduce “will also enable consumers to use stablecoin payment services with confidence”, his comment hints at one of the probable impacts his government’s latest move would have on payment and the crypto space as a whole, particularly with ample education.

A Ziglu survey shows that of three in ten people (31%) who are curious about investing in crypto, a lack of understanding of markets has dissuaded 62% from taking the plunge.

Another 43% cited a lack of a safe method of purchasing cryptocurrencies as a deterrent.

The legislation could go a long way towards increased stablecoin usage and crypto by providing the everyday consumer with a digital method of paying for goods and services.

The Economic Secretary to the Treasury also elaborated on the continued maturity of the crypto markets, specifically citing trading tokens like BTC as another potential avenue to fall under their regulatory oversight.

ProBit Global welcomes additional regulatory measures to the sector and will be holding a special 50% discount BTC Exclusive sale on April 12 as part of our overarching mission of bringing crypto to the masses.