Yesterday, the Transatlantic Taskforce for Markets of the Future issued a statement on an ongoing initiative for the United Kingdom and the United States to coordinate the developing digital asset regulatory environment. By working together, two leading financial jurisdictions can guide the rest of the world on how to regulate crypto. The partnership makes sense, and the well-established communication channels between the two governments can help develop a framework that benefits both sides.
Regarding the key issue of stablecoins, or privately issued digital currency mostly used for value transfer and payments, a policy paper was posted. The joint statement declared that:
“Both governments recognize that well-regulated stablecoins have the potential to promote efficiency and competition in our financial systems, modernize financial market infrastructure, and improve cross-border payments and transactions. Both governments also recognize the importance of promoting competition and innovation, protecting financial stability, safeguarding consumers, and maintaining public confidence in money, in a financial ecosystem that includes multiple forms of money.”
The two sides published “shared views” on stablecoins, as outlined below:
- The UK and United States affirm that stablecoins are an important vehicle for innovation in digital money
- The UK and the United States intend to stimulate competition and innovation through policies that facilitate the coexistence and circulation of different digital money solutions.
- The UK and United States intend to advance a timely, clear, and consistent legal, regulatory, and supervisory pathway for digital financial innovation, including for stablecoins.
- The UK and United States affirm that stablecoins held out as money should be fully backed, on at least a one-to-one basis, by high-quality, liquid assets.
- The UK and United States affirm that reserve, liquidity, and other prudential requirements for stablecoins should seek to mitigate risks and avoid unnecessary fragmentation.
- The UK and United States intend to advance regulatory approaches that promote innovation and resilience, without imposing burdensome constraints that undermine commercial viability, create barriers to entry, or hinder competition.
- The UK and United States support the integration of well-regulated stablecoins into activities including payments, settlement, and tokenized financial markets.
- The UK and United States intend to set high standards for the custody, segregation, and protection of stablecoin reserves.
- The UK and United States support clarity, predictability, and cross-border coordination in the event of any potential failure of a stablecoin issuer.
- The UK and United States affirm the importance of formal mechanisms to enable cross-border stablecoin activity as a feature of domestic regulatory and supervisory regimes
Neo CEO Laurent Descout said the statement issued at the Mansion House shows that stablecoins should be fully backed by high-quality assets. It will also boost confidence in digital assets and cross-border finance.
“The commitment from the UK and US to support well-regulated stablecoins is welcome. Adoption has accelerated rapidly, and stablecoins are increasingly being integrated into payments, settlement and global treasury infrastructure,” said Descout. “Stablecoins can make international payments faster and more efficient, but broader adoption will depend on clear, interoperable regulation that avoids fragmentation between markets.”
The priority now is to place these shared principles in practice.