LONDON (Reuters) – Britain will initially focus on regulating stablecoins rather than the broader cryptocurrency market given the risk of too little competition, UK financial services minister John Glen said on Tuesday.<\/p>\n
Facebook\u2019s move in 2019 to introduce its own stablecoin Diem, then known as Libra, raised concerns among governments and central banks that a major payments competitor could emerge overnight.<\/p>\n
\u201cWe need to manage risks to competition,\u201d Glen told a City & Financial conference.<\/p>\n
\u201cThere is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services,\u201d Glen said.<\/p>\n
\u201cWe believe the case for intervention in the wider cryptocurrency markets is less immediately pressing.\u201d<\/p>\n
Stablecoins such as the planned Diem – currently seeking approval in Switzerland – are designed to avoid the volatility typical of cryptocurrencies like bitcoin, making them in theory more suitable for payments and money transfers.<\/p>\n
Glen said stablecoins have become the largest component of cryptocurrencies by trading volume, and while no globally systemic player has emerged so far, this could change rapidly.<\/p>\n
The largest stablecoin by market capitalisation, Tether, is a fraction of the size of bitcoin, and is little used for commerce.<\/p>\n
Britain will not hold back innovation or be protectionist when it comes to using distributed ledger technology, which underpins cryptocurrencies such as bitcoin, Glen said.<\/p>\n
\u201cWe have a once-in-a-generation opportunity here to make vast strides in the efficiency of financial services, and ultimately benefit consumers and the economy as a whole,\u201d he said.<\/p>\n