Framework is needed to unite stablecoin regulation

The fragmenting regulatory landscape for stablecoin should be brought together under a system of mutual recognition between countries, attendees at the Digital Commonwealth Summit in London were told.

Speaking on a panel discussing stablecoin standards, Katie Harries, Director, International Policy at Coinbase, said that despite diverging regulation between leading economies, she believed some kind of coordination was still possible.

“Every jurisdiction is fundamentally doing different things, but we all recognise it is really important that there is some coordination,” she said. “The best outcome would be some sort of equivalence framework or mutual recognition framework that would allow stablecoins denominated in one currency to be traded in another. And I am optimistic that there could be coordination because mutual recognition would be beneficial to the EU, the US and the UK.”

The summit panel discussed the future of stablecoin versus Central Bank Digital Currencies with speakers unanimous in the view that CBDCs had been overshadowed by the growing interest in stablecoins.

The US has ruled out issuing Federal Reserve digital currency, but in principle the idea is still alive in Europe and the UK, with many other countries also experimenting with CBDCs. The Bank of England has launched a Digital Pound Lab and is consulting on next steps.

Against this background in the US and the UK, Ollie Carew, Director FinTech Consulting at EY, said Europe was further ahead.

“I think that might be an interesting place to keep an eye on because the digital euro has more political legs,” he said.