US and UK Set to Team Up Regulating Cryptocurrencies

Her Majesty’s Treasury hosted the regulatory pillar of the US-UK Financial Innovation Partnership with its counterpart, the US Treasury Department, on Jun 29th. Both parties acknowledged the importance of teaming up to support safe innovation and strengthen regulatory outcomes for digital assets across jurisdictions.

On Stablecoins

According to the joint statement issued, top domestic watchdogs such as the SEC, the CFTC, staff from the Bank of England, and the Financial Conduct Authority(FCA) have all participated in such a meeting, chiefly focusing on the recent development of stablecoins and CBDCs. The panel has laid a foundation for dialogues as such in the future, the document noted.

Since its birth, cryptocurrency has been made in response to third-parties-imposed restrictions on borderless transactions. With crypto assets making headlines with a series of fiascos amid a historic market crash, regulators find it pressing to develop cross-border efforts targeting the industry.

Among all the regulatory concerns regarding the space, the ongoing “key role of stablecoins and crypto-asset trading and lending platforms” in the digital asset ecosystems – as embodied by the recent drama occurring in the fall of Terra and Celsius – has caused concerns from watchdogs worldwide. The statement outlined:

“UK and US participants also considered future opportunities for further discussion on broader crypto-asset regulatory initiatives and considerations as their respective policy and regulatory agendas progress.”

Crypto regulations have also been a widely covered issue within G7 & G20 meetings, as indicated by the statement. Both parties vowed that “robust cross-border regulatory cooperation” that aims to provide a clear regulatory framework for stablecoins and crypto exchanges will be the theme behind such meetings in the future.

On CBDCs

In addition, the UK and US authorities also updated their approaches to CBDCs, exchanging views on their plans for policy research and technology exploration. It did not come as a surprise as a survey by the Bank of International Settlements (BIS) indicated that nine out of ten central banks are exploring how to launch their own CBDCs.

The rising trend of adopting CBDCs within the fiat-based monetary system is perceived by many central banks as an evolution of their respective roles rather than a revolution, according to Cecilia Skingsley, First Deputy Governor of Sweden’s central bank.

She stated that a big challenge ahead of cross-border CBDC payments rests upon interoperability as such digital currencies are designed and implemented by governments worldwide. As a result, cooperative communications between nations before launching such currencies have become crucial for guaranteeing prospective success.