City of London
Speaking at a City and Financial Conference today, John Glen said authorities need to regulate stablecoins due to the threat it poses should a major firm dominate the sector.
“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,” the financial services minister was quoted as saying.
Despite calls from financial experts to create a legal framework for the broader global crypto market, Glen noted that regulating “wider cryptocurrency markets” is not as pressing as stablecoins.
According to him, it is imperative to do so because they have, over the years, become the largest cryptocurrency by trading volume with Tether USD (USDT) leading the way.
The UK Finance Minister warned that while no dominating player has been allowed to conquer the market, things could change overnight when a popular firm gets the necessary regulatory approval to launch one.
Recall that in mid-2019, Facebook had planned on launching its stablecoin, originally known as Libra, which was later rebranded as Diem.
The project, which is governed by the Libra Association, will be with Facebook alongside other top entities as its members plan on launching a cryptocurrency that will not have volatility issues found in other cryptocurrencies.
However, global regulators have kicked against the move because of Facebook’s dominance in the social media space, with the firm having more than two billion active users monthly.
“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,” Glen added.
While Britain has previously considered regulating stablecoins, the country’s financial watchdog declined to issue its e-money rules for the cryptocurrency because they do not have the same features.
Alex Roy, head of consumer distribution policy at the Financial Conduct Authority (FCA), said it is impossible for stablecoins and e-money to have the same set of rules because the former is backed by a fiat currency or asset.