In January 2021, HM Treasury published a Consultation seeking views on how the U.K.’s regulatory framework may be amended in view of challenges posed by new technologies, including risks to consumers and stability, while supporting innovation and competition. The Consultation represents the first stage in the consultative process and focuses on establishing a sound regulatory environment for stablecoins.
In response, the FMLC has drawn attention to a number of legal uncertainties. These include definitional questions, such as identifying what a “token” is, as well as the difficulties arising from interpreting definitions under existing financial regulation in the context of token arrangements. The FMLC has also drawn attention to the possible overlap of the new regime for stablecoins with the existing regime under the E-Money Regulations. Finally, the Committee notes the difficulties arising from the application of concepts present in financial services regulation which reflect the traditional market infrastructure of intermediated securities, most, if not all, of which cannot readily be applied to a DLT context.
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