Circle Submits Evidence to the UK Parliament Regarding the Financial Services & Markets Bill

On 11th October, 2022, Circle submitted a response to a Call for Written Evidence of the UK Parliament’s Public Bill Committee (PBC) regarding the Financial Services & Markets Bill (FSMB) currently under consideration by Parliament. 

In its written response, Circle urged the Parliament PBC to carefully consider the provisions in the FSMB that relate to digital settlement assets (DSA), DSA firms, stablecoins, and stablecoin issuers. Circle wrote in support of the UK Government’s stated intention to make the UK a global hub for digital assets and financial services innovation broadly. Circle also wrote in support of driving growth and investment in the UK. Circle encouraged the Parliament PBC to consider that provisions currently being considered in the FSMB should not unduly stifle the digital assets industry, but rather bolster the current pace of innovation in the digital assets, device-centric and internet payments, and fintech space to better position the UK as a leader in these markets.

Further, Circle encouraged the Parliament PBC to lay out a clear supervisory approach between the Bank of England and the Financial Conduct Authority (FCA). Circle noted that the operational and risk profile of stablecoin issuers like Circle, and novel digital financial products like USDC, differ from traditional financial firms and services that are currently regulated and supervised prudentially - in the UK and elsewhere. Given this, Circle wrote in support of a supervisory model where the Bank of England and FCA should introduce a prudential model that acknowledges where an issuer must safeguard customers funds, and that the capital requirements that are currently applied to e-money institutions would be the most appropriate approach for stablecoin issuers such as Circle. Circle also noted that transaction limits for stablecoin issuers - either for a total volume of a circulating digital asset on a given basis, or a limit on the total number of transactions processed - would severely hinder the use, utility and function of products like USDC, EUROC and other payment stablecoins.