UK ‘Fully Behind’ Stablecoin for Wholesale Settlements, Says Treasury Official

The U.K. Government is “fully behind” a stablecoin for wholesale settlements that occur between banks, Andrew Griffith, the economic secretary, said in a meeting in Parliament on Tuesday.

The stablecoin – a digital asset backed by fiat currency – would not be issued by the government, but instead by a third party provider, Griffith told the Treasury Committee.

"I want to see us establish a regime and this is within the FSMB (Financial Services and Markets Bill) for the wholesale use for payment purposes of stablecoins," said Griffith, adding that the government is "a long way down the road with" this plan.

The wide-ranging FSMB is currently being debated in Parliament and will give regulators more power over crypto, including stablecoins. The bill should be ready for passage by Easter, Griffith had previously said.

Lenders around the world have been moving forward with issuing stablecoins for settlements. Japan’s largest bank Mitsubishi UFJ Trust, for one, looks set to issue a stablecoin for settlements in February. In the U.S., a group of larger banks in November began working with the Federal Reserve Bank of New York to test using digital tokens that represent the dollar for settlements.

The U.K. Treasury is launching a consultation on what issuing a central bank digital currency (CBDC) for wholesale and retail payments will look like, but Griffith believes that the stablecoin will “get there first.” Treasury will also issue a consultation on further regulating the crypto space in the coming weeks, something that lawmakers have been calling for following the collapse of crypto exchange FTX.

Despite the FTX collapse, the U.K. government continues to have its eyes set on establishing that country as a crypto hub, said Griffith, and wants to allow space for this “potentially disruptive game changing technology that can challenge but also turbocharge all of those (financial) industries."

CoinDesk has reached out to the Treasury for more information.

Read more: UK's Crypto Agenda Won't Be Derailed by FTX Collapse, Minister Says