The UK’s Financial Conduct Authority (FCA) is looking for additional feedback regarding its forthcoming regulatory framework for stablecoins, announced on Wednesday.

Key Points:

• The FCA’s draft regulations aim to ensure the value stability of stablecoins and mitigate the risk of failures in stablecoin and crypto custody firms.
• This initiative follows the significant scrutiny regulators placed on stablecoins after the collapse of the algorithmic stablecoin terraUSD in 2022, which resulted in major financial losses for investors.
• The FCA has been working on establishing its new crypto regulations since 2023 and is proactively engaging with the industry to develop effective proposals.

The FCA’s statement highlighted that in recognition of the potential benefits of stablecoins for financial services and the broader economy, it plans to explore integrating a dedicated focus on stablecoins within its innovation services in the coming months.

As part of its collaborative effort, the FCA will coordinate with the Bank of England to oversee the stablecoin landscape, announcing plans to publish a consultation paper later this year addressing operational stability and industry input on returns on backing assets.