{"id":126885,"date":"2025-04-10T12:15:29","date_gmt":"2025-04-10T12:15:29","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=126885"},"modified":"2025-04-10T12:15:29","modified_gmt":"2025-04-10T12:15:29","slug":"cryptos-growing-footprint-uk-regulator-sounds-alarm-over-stablecoin-risks","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=126885","title":{"rendered":"Crypto\u2019s growing footprint: UK regulator sounds alarm over stablecoin risks"},"content":{"rendered":"

Source: Cointelegraph.com NewsUnited Kingdom regulators are increasingly concerned about the impact of stablecoins and the broader crypto industry on the country\u2019s financial system and monetary stability.
\nDuring Financial Policy Committee meetings held on April 4 and 8, regulators noted that while the current \u201cinterconnectedness of unbacked crypto asset markets with the real economy and financial sector is growing but remains relatively limited,\u201d stablecoins and crypto markets have expanded significantly in the past year, drawing heightened regulatory attention.
\nThe UK, its central bank and its local regulator, the Financial Conduct Authority, have been developing frameworks for stablecoins to ensure financial resilience. The committee claims to have determined the factors that make a stablecoin resilient:
\n\u201cA key determinant of the resilience of stablecoins was the liquidity, credit and market risks of their backing assets, which were in place to ensure that redemptions can be met in a timely manner at par, even in periods of stress.\u201c
\nThe committee raised alarm over the \u201cgreater issuance of sterling offshore stablecoins with inappropriate backing assets.\u201d This has implications for UK financial markets and \u201ceven with appropriate regulation, greater use of stablecoins denominated in foreign currencies could make some economies vulnerable to currency substitution,\u201d the committee said.
\nBank of England. Source: WikimediaRelated: Builders beware \u2014 The UK\u2019s 2026 crypto regime is coming
\nCurrency substitution risks spark concern
\nCommittee members are worried that if stablecoin use were to move beyond crypto settlements, it could result in \u201cimplications for retail and wholesale cross-border payments.\u201d In retail flows, stablecoin use by households and small and medium-sized enterprises could, for cross-border payments, \u201cresult in currency substitution,\u201d increasing counterparty risk.
\nThe statement followed reports about growing stablecoin adoption not limited to crypto remittances in emerging markets, especially in Africa. A recent\u00a0report from Chainalysis found\u00a0that stablecoins now make up nearly half of all transaction volume in Sub-Saharan Africa.
\nSimilarly,\u00a0a late 2024 report suggested\u00a0that a number of emerging economies across Africa have the potential to become digital asset hubs. Ben Caselin, chief marketing officer of Johannesburg-based crypto exchange VALR, told Cointelegraph at the time:
\n\u201cSouth Africa is the entryway to the rest of Africa with a good rule of law and independent judiciary. It\u2019s easy to open a company in South Africa.\u201d
\nStill, reports of similar trends in developed economies with easily accessible financial infrastructure are scarce. Experts often point to the unavailability of banking services and unstable local fiat currencies as the reason why developing countries \u2014 from Africa in particular \u2014 are eager to adopt dollar-based stablecoins and crypto.
\nRelated: 3 reasons why stablecoin growth thrives globally \u2014 Will US follow under Trump?
\nUK is not alone in worrying
\nThe United Kingdom is in good company in worrying about the impact of stablecoins and the broader crypto industry on monetary stability. The European Securities and Markets Authority (ESMA) recently warned that crypto will increasingly threaten traditional financial markets\u2019 stability as the industry grows and becomes more entwined with conventional finance players. ESMA\u2019s executive director, Natasha Cazenave said:
\n\u201cWe cannot rule out that future sharp drops in crypto prices could have knock-on effects on our financial system.\u201d
\nLocal regulators are already acting on those concerns. In late March, the European Union\u2019s insurance authority proposed a blanket rule that would mandate insurance firms to maintain capital equal to the value of their crypto holdings as part of a measure to mitigate risks for policyholders.
\nMagazine: Ridiculous \u2018Chinese Mint\u2019 crypto scam, Japan dives into stablecoins: Asia ExpressRead More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Source: Cointelegraph.com NewsUnited Kingdom regulators are increasingly concerned about the impact of stablecoins and the broader crypto industry on the country\u2019s financial system and monetary stability. During Financial Policy Committee… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/126885"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=126885"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/126885\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=126885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=126885"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=126885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}