Circle Submits Response to UK HM Treasury’s FMI SAR Consultation


On 29 July 2022, Circle responded to a consultation issued by the UK’s HM Treasury regarding the Government’s proposed application of the Financial Market Infrastructure Special Administration Regime (FMI SAR) to systemic digital settlement asset (including stablecoin) firms. In its response, Circle reiterated its continued commitment to responsible digital asset regulation, and encouraged HM Treasury to establish a bespoke regulatory and oversight framework for systemic digital settlement asset firms, and for fully-reserved digital currency issuers to be subject to sound prudential regulation. Circle affirmed the need for greater clarity in determining a “systemic” designation for digital settlement asset firms, and questioned whether the FMI SAR was the appropriate regime for these firms given the existence of payments and e-money special administration regimes in the UK. Circle encouraged HM Treasury to thoroughly evaluate the differences between blockchain-based payment systems and traditional inter-bank payment systems prior to establishing a regulatory regime for digital settlement asset firms which may be ill-fitting.  

Additionally, Circle discussed the differences in its operational model and risk profile from that of a traditional financial market infrastructure (“FMI”) firm, for which the FMI SAR was originally developed and intended. Given these differences, and given the complexity of the digital settlement asset ecosystem, Circle wrote in support of developing novel supervisory frameworks that would appropriately recognize the diversity of digital settlement asset firms, their operations, and sufficiently regulate those firms.

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