British regulators have identified the stablecoin market as their primary assignment amid efforts to create a legal framework for virtual currencies in the country.
John Glen, the United Kingdom's financial services minister, has said that stablecoins will be the main focus of the government’s crypto regulatory activity.
Glen made delivered his comments while addressing a conference organized by City & Financial Global on Tuesday, Reuters reported.
For Glen, the U.K.’s decision to prioritize stablecoins over regulating the broader financial market is due to fears of monopolies emerging in the market based on the limited number of participants offering fiat-pegged cryptocurrency payment services.
“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,” Glen remarked.
Indeed, the minister’s argument echoes sentiments espoused by several financial regulators against the Diem stablecoin project. Initially dubbed Libra, regulatory authorities in different countries pointed to Facebook’s global presence as a significant risk factor to sovereign monetary policies associated with the planned digital currency project.
Diem for its part has attempted to smoothen these regulatory wrinkles by making wholesale changes to the project. However, Diem is yet to receive the necessary regulatory approval to begin launching its stablecoin.
Glen’s comments are the latest indication of the U.K. government’s focus on stablecoins as part of efforts to promote novel fintech innovations amid the country’s withdrawal from the European Union.
Back in November 2020, Rishi Sunak, chancellor of the Exchequer remarked that Brexit offered an inflection point for the U.K.’s financial services industry. At the time, Sunak revealed that the government would prioritize harnessing novel fintech innovations like central bank digital currencies and stablecoins to ensure the country keeps pace with the developments in the emerging digital economy.
As previously reported by Cointelegraph, the U.K. finance policy department called for public consultation on proposed rules for cross-border stablecoins back in January 2021.