UK House of Lords Urges Bank of England to Reassess Stablecoin Regulations
UK House of Lords committee calls on Bank of England to reconsider proposed stablecoin restrictions
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The UK House of Lords committee has urged the Bank of England to reconsider its proposed restrictions on stablecoin holdings, suggesting that limits of £20,000 for individuals and £10 million for businesses may hinder market competitiveness. The committee advocates for monitoring market growth instead of pre-emptively imposing limits.
- 01The proposed limits are £20,000 ($27,000) per coin for individuals and £10 million ($13.5 million) for businesses.
- 02The House of Lords committee questions the requirement for stablecoin issuers to hold at least 40% in unremunerated central bank deposits.
- 03The committee suggests that holding limits should only be imposed if financial stability risks are evident.
- 04The Bank of England is considering easing its restrictions after acknowledging they may be overly conservative.
- 05Stablecoins are digital tokens pegged to traditional financial assets, such as fiat currencies.
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A committee from the UK House of Lords has called on the Bank of England (BOE) to rethink its proposed restrictions on stablecoin holdings, which include limits of £20,000 ($27,000) for individuals and £10 million ($13.5 million) for businesses. In their report titled 'Stablecoins: waiting for regulation,' the Financial Services Regulation Committee expressed concerns that such limits could make the UK less competitive compared to other markets. The report also challenged the requirement for stablecoin issuers to maintain at least 40% of their backing in unremunerated central bank deposits, arguing that this could threaten the viability of these businesses. The committee recommended that the Bank monitor the market's growth and impose limits only if necessary for financial stability. In response, Sarah Breeden, the BOE's deputy governor for financial stability, indicated that the bank is reviewing the proposed rules, admitting they may have been too conservative.
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The proposed restrictions could significantly affect the competitiveness of the UK's stablecoin market.
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