The United Kingdom's central bank, the Bank of England (BOE), and the Financial Conduct Authority (FCA) have announced their plan to regulate the stablecoin crypto market in the country. This move comes as part of the UK government's efforts to establish clear rules for the digital asset industry.

The BOE and FCA will follow the regulations proposed by the UK government last week, with a focus on fiat-backed stablecoins. The regulatory framework for these stablecoins is set to commence in early 2024.

Under the plan, the BOE will supervise systemic stablecoins that are backed by the British pound. The Prudential Regulations Authority (PRA) highlighted in a letter that stablecoins used in systemic payment systems regulated by the BOE present lower contagion risks compared to other regulated stablecoins falling under the FCA's purview.

In addition, the FCA has clarified that stablecoin issuers will be required to obtain prior permission before circulating stablecoins within or outside of the UK. This measure aims to ensure proper oversight and accountability within the stablecoin market.

The recently released paper also addresses the potential revenue generated by stablecoin issuers. It states that issuers may retain revenue derived from interest and return from the backing assets. However, the FCA acknowledges that this may raise concerns among consumers if interest rates rise significantly, given that the regulated stablecoin backing assets are expected to be protected as client assets.

UK Prime Minister Rishi Sunak has expressed his desire for the UK to become a leading crypto hub. The introduction of comprehensive regulations for digital assets and crypto firms aligns with the nation's goals in this regard. The UK follows in the footsteps of the European Union and Japan, which have also implemented similar regulatory moves.

While the UK has taken steps towards establishing a clear set of rules for the crypto and stablecoin market, the United States has lagged behind in this aspect. It remains to be seen how the regulatory landscape will evolve in different jurisdictions as the crypto industry continues to grow and mature.

Overall, the BOE and FCA's plan to oversee the stablecoin crypto market in the UK reflects the country's commitment to fostering a regulated and transparent digital asset ecosystem. By providing clarity and regulation, the UK aims to position itself at the forefront of the global crypto landscape.