The U.K. government is “fully behind” a stablecoin for wholesale settlements that occur between banks, Andrew Griffith, the economic secretary, said in a meeting in Parliament on Tuesday.
The stablecoin – a digital asset backed by fiat currency – wouldn't be issued by the government, but instead by a third-party provider, Griffith told the Treasury Committee.
"I want to see us establish a regime, and this is within the FSMB (Financial Services and Markets Bill) for the wholesale use for payment purposes of stablecoins," Griffith said, adding that the government is "a long way down the road with" the plan.
The wide-ranging FSMB, which is being debated in Parliament, would give regulators more power over crypto, including stablecoins. The bill should be ready for passage by Easter, Griffith said previously.
Lenders around the world have been moving forward with issuing stablecoins for settlements. Japan’s largest bank, Mitsubishi UFJ Trust, for one, looks set to issue a stablecoin for settlements in February. In the U.S., a group of larger banks in November began working with the Federal Reserve Bank of New York to test using digital tokens that represent the dollar for settlements.
The U.K. Treasury is launching a consultation on what issuing a central bank digital currency (CBDC) for wholesale and retail payments will look like, but Griffith said he believes that the stablecoin will “get there first.” Treasury will also issue a consultation on further regulating the crypto industry in the coming weeks, something that lawmakers have been calling for following the collapse of crypto exchange FTX.
Despite the FTX debacle, the U.K. government still wants to establish the country as a crypto hub, said Griffith, and wants to allow space for this “potentially disruptive game-changing technology that can challenge but also turbocharge all of those (financial) industries."
Treasury didn't immediately respond to a request for comment.
