Bank of England Signals Softer Stablecoin Stance
The Bank of England is indicating a more accommodating approach to stablecoins, suggesting systemic issuers can hold deposit accounts at the central bank, with reserves in short-term gilts and central bank deposits. This could lower barriers for regulated stablecoin issuers and potentially make the UK more attractive than the EU for crypto innovation.
The Bank of England (BoE) is considering adjustments to its stablecoin regulations following industry concerns that initial proposals could hinder innovation. Deputy Governor Sarah Breeden indicated the bank is open to alternative approaches for managing financial stability risks related to shifts from bank deposits to stablecoins. A key point of contention is the proposed holding limits of £20,000 for individuals and £10 million for businesses. The BoE is evaluating the feasibility and impact of these caps, considering the difficulties of tracking token holders and the cost-effectiveness of implementing such a system. Some argue the limits could push investors to use USD-pegged stablecoins. The central bank is also reviewing its proposed asset-backing requirements, specifically the 60:40 split between short-term UK gilts and unremunerated deposits at the Bank of England. Breeden stated the BoE will release draft rules for public consultation in June, with final regulations expected by the end of the year.
