Consultation outcome

Managing the failure of systemic Digital Settlement Asset (including stablecoin) firms

From:: HM Treasury
Published: 31 May 2022
Last updated: 30 October 2023 — See all updates

Read the full outcome

Managing the failure of systemic digital settlement asset (including stablecoin) firms: Government response to consultation

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Detail of outcome

The government consulted on its approach to managing the failure of a systemic digital settlement asset (including stablecoin) firms by applying a modified Financial Market Infrastructure Special Administration Regime (FMI SAR) to such firms. Overall, respondents were broadly supportive of the proposed approach.

Some respondents sought clarity on how the FMI SAR would be applied in practice, especially with regard to the additional return or transfer of customer funds and custody assets objective.

As set out in the response, the government intends to lay regulations to implement the policy intent described in the consultation in due course and will provide further clarity on the operation of the modified FMI SAR by making insolvency rules.

Original consultation

Consultation description

This consultation sets out the government’s proposed approach to managing the failure of a systemic digital settlement asset (including stablecoin) firms, by way of the application to such firms of a modified Financial Market Infrastructure Special Administration Regime (FMI SAR).

In particular, we wish to receive your responses to the following questions:

Do you have any comments on the intention to appoint the FMI SAR as the primary regime for systemic DSA firms (as defined at para 1.8) which aren’t banks?
Do you have any comments on the intention to establish an additional objective for the FMI SAR focused on the return or transfer of customer funds, similar to that found in the PESAR, to apply solely to systemic DSA firms?
Do you have any comments on the intention to provide the Bank of England with the power to direct administrators, and to introduce further regulations in support of the FMI SAR to ensure the additional objective can be effectively managed, or what further regulation may be required?
Do you have any comments on the intention to require the Bank of England to consult with the Financial Conduct Authority prior to seeking an administration order or directing administrators where regulatory overlaps may occur?

Following the closure of the consultation, HM Treasury will consider respondents’ views and publish a consultation response.

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