On April 12, Andrew Bailey, Governor of the Bank of England, stated during a press conference at the Institute of International Finance in Washington that stablecoins should be regulated in the same way as fiat money.
According to Bailey, stablecoins lack “assured value,” one of the main characteristics people look for when investing in this type of “digital money” that seeks to resemble fiat. She argues that because of this, the country needs to focus on providing a proper and strict regulatory framework, much like traditional financial products:
“As we have seen, they [the stablecoins] they do not have assured value, and in the work we have done at the Bank of England we have concluded that the public should expect assured value in digital money, and confidence in this is needed to underpin financial stability.”
Are the tokens real money?
Andrew Bailey warned that stablecoins must comply with the same characteristics and regulations as real money in order to function properly as such. This situation has not yet happened with any stablecoin.
Furthermore, he noted that regulators should consider all appropriate liquidity buffers to respond to any banking crisis or bank run, such as the recent one involving Silicon Valley Bank, which affected thousands of investors.
Currently, the Bank of England is following the evolution of digital money to reach a conclusion on the possibility of issuing a Central Bank Digital Currency (CBDC). Digital money has been around for decades, but the technology used to manage it has changed. Blockchain provides a decentralized and auditable way to transfer money in a more efficient way, but centralization is the standard for legal, geopolitical, and ultimately practical reasons.
Bailey said that while digital money should not exist only in the form of CBDCs, it is likely that there will be a need to create an “anchor to the value of all forms of money, including the new digital ones, and ensure the maximum opportunity for innovation in pay”. .”
Regulators vs Stablecoins
As reported by CryptoPotato, regulators have been discussing stablecoin regulation for several years, but have yet to reach an agreement on the necessary steps to protect investors. According to the executive director of the Blockchain Association, Kristin Smith, this may be because US watchdogs are focusing more on illicit uses of stablecoins, such as money laundering or terrorist financing, than in its daily use as digital money.
Furthermore, he added that cryptocurrencies are “much more transparent than what we see in the traditional financial services system.” However, he noted that the cryptocurrency and stablecoin market must be properly regulated to avoid stifling technological innovation.
On the other hand, Jeremy Allaire, CEO of Circle, recently stated that stablecoins should not be regulated by the SEC, as the agency is not qualified to fulfill that role and it is not their responsibility, and there are other custodians in the country. top. suitable for it. Circle is the company behind USDC, the second largest stablecoin in the world.
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This post Stablecoins must comply with the same regulations as real money, Bank of England
was published first on https://cryptopotato.com/stablecoins-should-meet-same-regulations-as-real-money-bank-of-england/