In the UK, legislation is evolving to support innovation in payments and transfers. Recently, the House of Lords supported a secondary statutory duty for the Bank of England to enable innovation in payments, including digital money. The change is part of the Financial Services and Markets Bill, which has yet to be sent over to the House of Commons.
Peers voted on several amendments this week, with several government-opposed changes passing, including a requirement that the Treasury publish a digital-asset strategy within 12 months of assent. The government dislikes a deadline and believes it already has a digital asset strategy in place.
As for the secondary duty, the goal is stability. The ongoing challenge is balancing innovation and change, which may entail risk. This includes stablecoins, tokenization and more.
Charlotte Schiøttz Hassing, Head of Products, Payments & Business Development at Banking Circle, commented on the legislation in the House of Lords:
“Giving the Bank of England an explicit objective to support innovation in payments is a welcome step. Regulation has a critical role to play not only in safeguarding financial stability, but in creating the confidence and clarity that allow new payment technologies to move from experimentation into widespread adoption. The inclusion of emerging forms of digital money is particularly important as stablecoins and other digital assets become increasingly integrated within mainstream financial services.
“At Banking Circle, we are seeing this evolution first-hand. Following the award of our CASP license earlier this year, we launched stablecoin services that connect traditional fiat infrastructure with digital asset rails. Clear, proportionate regulatory frameworks will be essential to enabling institutions to embrace these technologies safely and ensuring the UK remains competitive as payments continue to evolve.”
Once in the House of Commons, the legislation may change, and amendments may be removed. Still, the government supports the legislation, thus acknowledging the importance of policies that recognize the change in finance and the inevitability of digital assets.