Bank of England wants to be able to control stablecoins

The BoE announced yesterday that it would step in in the instance that a stablecoin issuer was showing signs of collapse that might have repercussions for the UK financial system or significant consequences for businesses and other interests.

It was announced some time ago that the British government wanted to make the UK a crypto asset technology hub, and it appeared that it was preparing to welcome crypto startups that would bring innovation and wealth to the country.

However, the recent announcement by the Bank of England, that it would intervene and oversee a collapse in any of the stablecoins, might be seen by some as a rather ponderous effort to grant itself the right to say what goes in the stablecoin market.

HM Treasury’s consultation document does specify that the central bank will only intervene in the event of a “systemic” collapse, but the definition also allows the bank to oversee a situation which has “significant consequences for businesses or other interests”.

Given the lack of any real clarity as to the extent of the proposed powers to be invested in the Bank of England, or exactly who they are to be directed at, it is arguably a concern for any crypto company that might want to locate in the United Kingdom.

Having regulatory authorities that do not have the deep knowledge of the various sectors in the industry decide what is best for crypto is bad enough, but for an institution such as the Bank of England to have the reins when things take a tumble is also a scary thought.

According to the consultation document, the Bank of England is supposed to consult with the UK regulator (Financial Conduct Authority) so that it can acquire a special administration order giving it authority to act.

Both the Bank of England, and the FCA, have made their anti-crypto sentiments known numerous times in the past, with heavy-handed statements basically warning investors to stay away from cryptocurrencies.

Of course investors need protections, and it’s fairly obvious that the BoE and the FCA will be involved. The question is, how fairly are crypto companies likely to be treated, and will they get the same consideration as any company in the traditional financial system?