Central banks and their governments are involved in a giant evasion tactic. The thinking is universal, and simple: to persuade investors that central bank-run digital coins, be they central bank digital currencies (CBDCs), or “stablecoins’, are really some sort fo substitute for genuine cryptos.
They are not. What investors get is a form of digital bank account run by central banks. The accounts have a superficial similarity to a cryptocurrency, but are in fact totally transparent – and do not benefit from an independent algorithm asa controlling factor. Recent moves show the central bankers’ attempts to pull the wool over investors’ eyes. One tale stood out for us…
“The UK government commenced a consultation on crypto-assets in early 2021. This past week, the UK government indicated its intent to acknowledge stablecoins as valid forms of payment while aiming to emerge as the world’s top crypto hub. This stands in stark contrast to the meandering approach taken by the US where the Chairman of the SEC, Gary Gensler announced this week he was asking staff to review how to get crypto firms “registered and regulated” most likely forced into a compliance regime created before the internet existed.
The UK government has provided a summary of its approach:
“Stablecoins are a form of cryptoasset which aim to maintain a stable value relative to other assets. The government has confirmed its intention to legislate to bring certain stablecoins, where used as a means of payment, into the regulatory perimeter. This document summarises feedback to the consultation, and outlines further detail regarding how the government intends to regulate certain stablecoins. The document also outlines the feedback received to the call for evidence on the investment and wholesale uses of distributed ledger technology, and sets out the government response, including further thinking on the development of the Financial Market Infrastructure Sandbox.”
The UK government believes that stablecoins have the potential to become a popular means of payments, creating efficiencies and removing existing friction. A future consultation is anticipated later this year to review the regulation of other crypto activities with the expectation that the UK will “take a leading role” in the ecosystem.
“The government will ensure sufficient flexibility is built into the UK’s regulatory framework to allow regulators to adapt rules and requirements as international work concludes, benefiting too from the agility that will be afforded to UK financial services legislation by the Future Regulatory Framework.”