This article briefly:
The Bank of England and the Bank for International Settlements completed a pilot to test asset transfers.
The new system only allows an asset to change hands if an asset in another linked ledger does so.
The Bank of England’s pursuit of stablecoin settlement could accelerate the passage of the FSM Bill.
The Bank for International Settlements and the Bank of England recently completed a central bank digital currency (CBDC) pilot, which could refocus lawmakers on finalizing crypto regulation in the United Kingdom.
The pilot, Project Meridian, coordinated information between the Bank of England’s real-time gross settlement system and the Land Registry to purchase homes using central bank money.
Bank of England needs new laws to consider CBDC stablecoin settlements
The transfer involves only commercial banks and legal entities representing the buyer and seller.
A synchronization operator links RTGS and the land registry, ensuring that money changes hands only when property changes hands. The connection uses an application programming interface (API) that complies with global financial messaging standards. An API defines the interaction between two independent software systems.
The Bank of England could adapt the API to transfer these messages to other asset classes before the RTGS system is launched next year.
Earlier this month, Sir John Cunliffe, the UK’s deputy governor for financial stability, suggested that a new interbank settlement system could pair RTGS with a distributed ledger.
Alternatively, the BoE could wait for the passage of the Financial Services Markets Bill, the new law that defines the rules for stablecoin settlements.
Cunliffe argued that while stablecoins offer payment efficiencies, rules need to be put in place before banks can use them to settle interbank transactions.
UK lawmakers could finish bill within a year, finance ministry official says
While there is no set time frame for the bill’s passage, lawmakers can expedite the process to quickly respond to unforeseen events. Chancellor of the Exchequer Andrew Griffith recently told CNBC that the government plans to complete crypto regulations within the next year.
The crypto-related FSM Bill completed the committee stage in the House of Lords on March 23. The bill is currently at the report stage, where members can propose further amendments that were not covered in the committee stage.
The bill is reprinted with all agreed changes before it goes to third reading, which is the last chance to make amendments.
The final stages of passage include consideration of amendments and Royal Assent. If the Commons and Lords quickly agree on the final revisions, the King can turn the bill into law.
After that, crypto industry players may have a window to comply with the new law. Coinbase said that U.S. cryptocurrency regulation could lead to a shift in focus from the U.S. to the U.K.