The stablecoin debate is far from over. In the United States, the Treasury recently advocated for a minimal federal regulatory framework on stablecoins. At the same time in the United Kingdom, AMFE is issuing warnings regarding proposed regulations from the Financial Conduct Authority (FCA). Which of these great powers will achieve regulation?
US Treasury Secretary in favor of federal regulation of stablecoins
During an early February 2024 hearing before the House Financial Services Committee, Janet Yellen informed lawmakers that government financial authorities want to establish a minimum level of federal regulation for stablecoin issuers. This would go beyond current regulations enforced by some states.
According to Yellen, a federal regulator should have the power to determine whether stablecoin issuers should be blocked from issuing such assets. This position provokes a debate with the Republicans! The latter are in favor of greater authority for state regulators in this area.
Financial Markets Association of Europe warns in UK
Meanwhile, in the United Kingdom, the Association of Financial Markets in Europe (AFME) submitted comments to the Financial Conduct Authority (FCA) regarding its proposals to regulate stablecoins.
Overall, AFME welcomes the proposals but warns against certain aspects. Its director James Kemp is concerned about the treatment of security tokens, which he believes should be considered securities throughout their lifespan.
AFME also suggests that the FCA refrain from applying parts of the proposal to stablecoins issued abroad. And this, until the establishment of international frameworks.
Different approaches on both sides of the Atlantic
These two news items highlight different approaches from American and European regulators regarding stablecoins. In the United States, the debate concerns the appropriate level of regulation between the states and the federal government.
In Europe, the issue concerns more the harmonization of regulations between countries to guarantee the integrity of the single market. But in both cases, the objective remains the same: to regulate stablecoins to limit risks without stifling innovation.
Although the United Kingdom is moving towards more regulatory autonomy since Brexit, this warning from AFME recalls the importance of coordination between European regulators to guarantee harmonized rules. The regulation of stablecoins requires a comprehensive approach to avoid blind spots or contradictions. Dialogue continues between London and Brussels to align technological innovations and investor protection.
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