- The regulatory pillar of the Financial Innovation Partnership between the U.S. and the UK was held last week
- Topic being discussed were regulation of stablecoins and crypto lending platforms, as well as CBDCs
- Two meeting have already taken place since the FIP was formed in 2019
Regulatory bodies from the U.S. and UK held their third joint meeting last week, where topics of mutual interest between the two countries regarding crypto and digital asset ecosystems were discussed. The meeting, which took place last Wednesday, focused on stablecoins and lending platforms, which is hardly a surprise given recent events involving Terra, Celsius, and Coinflex. Both countries also updated each other on their progress in launching a Central Bank Digital Currency (CBDC), the details of which are still under wraps for the most part on both sides of the pond.
Anti-crypto Establishments Representing UK
The U.S. and UK formed the Financial Innovation Partnership (FIP) in 2019, with the first meeting taking place in August 2020. The avowed aim of the FIP is to “deepen ties between U.S. and UK financial authorities on financial innovation”, with the latest meeting being the “Regulatory Pillar” meeting following the August 2020 meeting and a further one in June last year.
Representatives from the Bank of England and the Financial Conduct Authority, two institutions that vehemently despise the crypto sector and all it stands for, were there to speak for the UK, while the American contingent included representatives from the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Securities and Exchange Commission and Office of the Comptroller of the Currency.
Stablecoins and CBDCs on FIP Menu
According to a statement issued by Her Majesty’s Treasury, the two countries “exchanged views on crypto-asset regulation and market developments, including recent developments in relation to stablecoins and the exploration of central bank digital currencies (CBDCs).”
The stablecoin issue is hardly a surprise following the collapse of Terra in May, but even before that, the issue of stablecoins had been raised at the highest level in the U.S., with several House committee hearings on the subject already having taken place prior to the collapse of the algorithmic stablecoin, a collapse that lost some investors their life savings.
CBDCs are a topic that has seen more activity in the U.S. recently, with two digital dollar proposals made in recent weeks and more progress seemingly being made on the subject that there is in the UK. The UK has shown interest in a digital pound, but little is known publicly of any progress – the Bank of England and the Treasury were said to be exploring the prospect in April last year, while the pro-crypto Digital Pound Foundation was formed in October 2021 to ensure that any resultant CBDC doesn’t take a hostile stance towards the emerging digital money ecosystem.
Crypto Lending Platform Under the Microscope
The FIP meeting also covered the recent issues surrounding lending platforms, which is clearly causing concerns on both sides of the Atlantic:
Recent events highlight the key role of stablecoins and crypto-asset trading and lending platforms in the digital asset ecosystem, the variance in their governance and operations, and the need for robust cross-border regulatory cooperation.
The committee will no doubt have discussed the recent crises to hit Celsius, BlockFi, Voyager Digital and Coinflex as part of their discussions on lending platforms which have led to user funds being stuck on them as the companies involved halted withdrawals due to liquidity issues.
The FIP meetings are often held as ancillary meetings to the much larger U.S.-UK Financial Regulatory Working Group meetings, the next of which is due to be held this month.