UK Financial Authorities Unveil Pyxtrial For Better Oversight of Stablecoins

The Bank for International Settlements (BIS) and the Bank of England are running a project that allows the tracking of stablecoin reserves in real-time.

The UK financial watchdog is piloting a new system to monitor stablecoin reserves in real-time.

Dubbed Pyxtrial, the technology will enable UK financial authorities to directly access data from users’ systems for on-chain liability verification. The system will also apply to other tokenized products backed by Real-World Assets (RWA).

The announcement comes amid the UK watchdog’s interest in stablecoins, which are a fast-growing sector in the crypto market. However, the sector remains largely unregulated, sparking concerns among authorities.

The UK watchdog has expressed skepticism over the validity of the reserves that stablecoin issuers claim to back their holdings. This follows a period of heightened scrutiny of stablecoin reserves and a wave of insolvencies in the crypto industry.

In response to the fallout, some stablecoin issuers, including Tether, and even exchanges, like Binance, have engaged in self-regulation. For instance, Binance introduced a Proof-of-Reserves system to instill confidence in the exchange’s solvency.

Meanwhile, the إفادة من قبل شركة ديفلي لاماstablecoins are a major use case for DeFi, with a market capitalization of $164.02 billion. But as the market grows, so do concerns over a lack of regulation.

Stablecoin usage has attracted the attention of regulators, particularly in the context of disclosures and potential instability during market stress. SEC Chair Gary Gensler has asserted that some stablecoins are likely securities.

In light of this, the regulator has proposed registration and additional oversight to address these concerns.

For example, in 2023, the US SEC went after Binance US stablecoin (BUSD) over securities claims. This move sent shock waves throughout the market, hinting at which dollar-pegged tokens could draw regulatory attention and investigation.

However, the regulator later dropped the charges after a court ruling in favor of Binance, stating that BUSD sales did not constitute a securities offering. This verdict provided a win for the stablecoin sector in the US.

Now, as the UK stablecoin market unfolds, Pyxtrial could pave the way for greater oversight in the UK.