The United Kingdom plans to focus initially on regulating stablecoins, before moving to tackle the wider digital currency sector, according to remarks from a government official.
Financial services Minister John Glen said the U.K. government would target stablecoins in order to prevent threats to competition, in a bid to prevent any single private player from coming to dominate the market, Reuters reported.
In particular, it is thought the minister was referring to Facebook and its Diem stablecoin, formerly known as Libra. The stablecoins caused consternation in the U.K. when its launch was originally mooted back in 2019, in common with governments and central banks elsewhere in the world.
Addressing a City & Financial conference, the minister said that while there was a case for intervention in the wider digital currency markets, private stablecoins were a more immediate target.
“We need to manage risks to competition. There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services. We believe the case for intervention in the wider cryptocurrency markets is less immediately pressing.”
On blockchain technology, Glen said the U.K. government would take steps to encourage innovation and collaboration on new technologies, in a bid to strengthen this emerging sector of the economy.
“We have a once-in-a-generation opportunity here to make vast strides in the efficiency of financial services, and ultimately benefit consumers and the economy as a whole,” according to the official.
Stablecoins have grown to become the largest component of global cryptocurrency trading volumes, allowing for the utility of on-chain payments and settlement without the exchange risk of public digital currencies.
With private interests such as Facebook mobilizing to launch their own stablecoins, governments in the U.K. and elsewhere are increasingly turning their focus to regulating this emerging market.
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