Fintechs and crypto asset providers have expressed support for the UK government’s decision to include stablecoins within regulatory oversight as outlined in the recently published Financial Services and Markets Bill. This initiative marks the first time the UK’s licensing regime will specifically address a crypto asset. While some crypto businesses must comply with existing anti-money laundering regulations, any issuer of stablecoins utilized for payments is now required to obtain a license from the Financial Conduct Authority (FCA).
Blair Halliday, head of UK at crypto exchange Gemini, commented, “This is a positive move recognizing the significant role these assets will play in our future economy and financial system.” She emphasized that regulation has been vital to Gemini since its founding and that the Bill fosters greater consumer protection while encouraging innovation and broader digital asset adoption.
In addition, Gemini recently received a virtual assets service provider registration from the Irish Central Bank, marking the first time Ireland has issued this relatively new license to a crypto firm.
Harry Eddis, global co-head of fintech at law firm Linklaters, described the inclusion of stablecoins in regulatory scope as a significant milestone. He also welcomed the anticipated establishment of a new sandbox to be operated by the Bank of England and FCA. Eddis noted that further legislation could be forthcoming, suggesting that while the initial scope of the stablecoin regime may be limited, consultations later this year may lead to an expanded regulatory framework for the crypto sector.
This Bill represents one of the first major financial regulatory actions taken since the UK exited the European Union. It coincides with the introduction of the UK’s AI Rulebook, which outlines its strategy for implementing ethical guidelines for artificial intelligence use. While the proposals address similar ethical concerns as the EU regulations, the UK takes a more principles-based and decentralized approach, potentially indicating divergent regulatory paths between the UK and EU.
This divergence is particularly crucial as regulators navigate significant supervisory challenges, including regulations regarding sustainable assets, greenwashing, and the emergence of crypto and digital assets. Industry stakeholders have called for regulations to strike an appropriate balance between protecting investors and facilitating innovation.
Andrew Pilgrim, UK financial services partner at EY, stated, “Regulatory authorities need to remain vigilant about systemic and conduct risks, but the financial sector must also support new growth and innovation.” He stressed the importance of the UK not falling behind other global financial centers, such as New York, Paris, and Amsterdam, which are advancing their reform agendas. He encouraged firms to leverage these reforms to maintain the UK’s status as a competitive and high-standard jurisdiction.