The paper focuses on sterling-denominated stablecoins because these are "the most likely digital settlement assets to be used widely for payments". 

Part one outlines the central bank's role in ensuring the safety of money and payments and the scope of the regime, while Part two explains the proposed requirements of the regime.

The paper is published alongside a discussion paper from the Financial Conduct Authority on its regulatory approach to stablecoin issuers and custodians, a letter from the Prudential Regulation Authority to bank Chief Executive Officers on innovations in the use by banks of deposits, e-money and stablecoins, and a roadmap paper, which sets out how the various regimes interact together. 

With these joint publications, regulators aim to "provide clarity as to which regulatory regime each form of money and money-like instrument falls under, with regulatory boundaries between each regime clearly established."

The deadline for comments on the Bank of England's discussion paper is 6 February 2024.

The FCA proposes to define the standards that issuers and custodians of regulated stablecoins are required to meet, once the regime comes into force. To be authorised under the new regime, issuers and custodians will "need to show they can meet these standards, deliver on the promise of stability, and provide legal protections consumers can expect from a regulated stablecoin."

The FCA has also given further detail on the Treasury’s idea for consideration to allow overseas stablecoins access to the UK payment chain, subject to being assessed by firms acting as ‘payment arrangers’. Payment arrangers would be regulated through the PSRs. They would be able to "initiate or arrange a payment using overseas stablecoins." However, they would first have to assess if the fiat-backed stablecoin and the stablecoin issuers meet the FCA's required standards. 

The FCA's discussion paper is part of a joint publication package with the Bank of England’s discussion paper on systemic payment systems using stablecoins and related services providers, and the Prudential Regulation Authority’s Dear CEO letter on innovative uses of deposits, e-money and stablecoins. 

To accompany these publications, the FCA is also publishing a joint ‘Roadmap paper’ with the Bank of England and Prudential Regulation Authority, which aims to explain how its proposed regimes interact and its approach for dual regulation. 

The deadline for comments on the FCA discussion paper is 6 February 2024.

The paper provides additional detail following the UK regulatory approach to cryptoassets, stablecoins, and distributed ledger technology in financial markets consultation response published in April 2022. 

This update will inform development of the Financial Conduct Authority and Bank of England’s approaches for regulating stablecoin issuers and custodians, and systemic digital settlement asset payments systems and service providers respectively.

The government has confirmed its final proposals for cryptoasset regulation in the UK, including its intention to bring a number of cryptoasset activities into the regulatory perimeter for financial services for the first time. 

This document provides the government’s response to the consultation and call for evidence on the future financial services regulatory regime for cryptoassets, which was published on 1 February 2023. 

It summarises the feedback received by HM Treasury in response to the consultation, and details how this has influenced further development of the government’s approach. 

The consultation sets out HM Treasury’s proposed approach to delivering a Digital Securities Sandbox (DSS), which will be the first financial market infrastructure sandbox delivered under the powers granted as part of the Financial Services and Markets Act 2023. 

The DSS will facilitate the testing and adoption of digital securities across financial markets. Through the DSS, industry will be able to set up financial market infrastructures that utilise digital asset technology, which can perform a number of activities in relation to digital securities under a temporarily modified legislative and regulatory framework.

Deadline for comments is 22 August 2023.

The consultation and call for evidence builds on previous HM Treasury proposals, which focussed on stablecoins and the financial promotion of cryptoassets. It specifically targets the future UK regulatory framework for cryptoassets used within financial services, rather than the wider application of distributed ledger technology (DLT) in financial services or the use of cryptoassets outside financial services. 

The proposals will place responsibility on crypto trading venues for defining the detailed content requirements for admission and disclosure documents – ensuring crypto exchanges have fair and robust standards.

The proposals will strengthen the rules around financial intermediaries and custodians, which have responsibility for facilitating transactions and safely storing customer assets. These steps will help to deliver a "robust world-first regime strengthening rules around the lending of cryptoassets, while enhancing consumer protection and the operational resilience of firms." As part of this approach, the consultation will seek views on improving market integrity and consumer protection by setting out a proposed crypto market abuse regime.

To address industry concerns about the small number of Financial Conduct Authority (FCA) authorised cryptoasset firms which can issue their own promotions, HM Treasury is also introducing a time limited exemption. Cryptoasset businesses that are registered with the FCA for anti-money laundering purposes will be allowed to issue their own promotions, while the broader cryptoasset regulatory regime is being introduced.

This approach delivers on the original policy intention of the measure to promote innovation, enhance consumer protection and ensure that cryptoasset promotions can be held to equivalent standards as promotions of financial services products with similar risk profiles.

Commenting on the consultation, Economic Secretary to the Treasury Andrew Griffith MP said the aim is to establish a "proportionate, clear regulatory framework which enables firms to innovate at pace, while maintaining financial stability and clear regulatory standards. This includes a proposal to bring centralised cryptoasset exchanges into financial services regulation for the first time, as well as other core activities like custody and lending."

Deadline for comments is 9am on 30 April 2023.

For a detailed analysis of the consultation and comments from Hogan Lovells Global Digital Assets and Blockchain Practice, see UK Cryptoassets: HMT consultation and call for evidence on a future financial services regulatory regime

The Commission’s proposals "aim to deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people, groups and companies to interact online and benefit from them."

The Law Commission argues that although the law of England and Wales has gone some way to accommodate the rise of new technologies, there are several key areas that require law reform, to "recognise and protect the rights of users and maximise the potential of digital assets."

The consultation paper examines how existing personal property law does – and should –  apply to digital assets.

As they are not tangible, digital assets have different features to traditional physical assets. Their unique qualities mean that "many digital assets do not fit easily into current private property law categories or definitions."

The consultation paper argues the law must therefore go further to acknowledge these unique features, which in turn would "provide a strong legal foundation for the digital assets industry and for users. Through these reforms, the legal system would help to create an environment that is more conducive to digital assets and their markets."

Proposals in the consultation paper include:

• Explicitly recognising a distinct category of personal property under the law which is better able to accommodate the unique features of digital assets. The distinct category is provisionally called “data objects”.
• Options for how this distinct category of personal property could be developed and implemented under current law.
• Clarifying the law around ownership and control of digital assets.
• Clarifying the law around transfers and transactions involving digital assets.

The Commission's proposals are "designed to ensure that the law remains dynamic, highly competitive, and flexible, so that it can support transactions and other arrangements involving digital asset technology."

The reforms also aim to help to achieve the UK Government’s stated goal of the jurisdiction of England and Wales becoming a global hub for digital assets, and in particular, for crypto-tokens and crypto-token systems.

Deadline for responses to the consultation is Friday 4 November 2022.