Following its consultation on the failure of Digital Settlement Asset firms, the government has now published the consultation outcomes. In the consultation, the government sought responses to its approach on managing the failure of a systemic digital settlement asset firms, which would involve applying an FMI SAR to these firms.
The response to the consultation revealed that overall, the respondents were supportive of the approach, with some seeking clarity on how the FMI SAR would be applied in practice, particularly the additional ‘return or transfer of customer funds and custody assets’ objective. Some respondents also suggested that a bespoke failure regime may be better placed to address the challenges posed by the failure of a systemic stablecoin firm.
FSMA 2023 will enable digital settlement assets to be brought within the regulatory remit of the BoE and PSR
The government plans to provide further clarity on the modified FMI SAR and to introduce regulations in due course. first it will implement the policy intent, and then make the requisite insolvency rules.