The Bank of England is reassessing elements of its proposed stablecoin regime following input from digital asset firms.
Sarah Breeden, the central bank’s deputy governor for financial stability, told the Financial Times that the BoE was reviewing its approach as stablecoins become more widely used.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Stablecoins are digital tokens pegged one-to-one with a fiat currency, such as the US dollar. Sterling-based stablecoins represent less than 0.5% of the roughly $315bn global stablecoin market, the report said.
“We are keen to create a regime where stablecoins can succeed and can deliver benefits to the users,” Breeden said in an interview to FT.
“But it is money and we want to make sure that this new form of money is safe.”
The BoE has proposed temporary holding limits for UK stablecoins to reduce the risk of large deposit outflows from banks. The draft approach would cap individuals at £20,000 per coin and businesses at £10m.
Breeden said the BoE is considering alternatives to how the limits would be applied after industry feedback.
The central bank is also reviewing a proposal that at least 40% of assets backing a UK stablecoin should be held as non-interest-bearing deposits at the BoE, with the remainder in sovereign bonds and other liquid assets.
The FT said the requirement is more restrictive than US rules and would affect profitability for stablecoin operators.
Breeden added: “Perhaps not surprisingly, the industry would prefer to hold more interest-earning assets, as that goes to their bottom line.
“It was based on experience of potential liquidity stress. But we will look hard to see if we have been overly conservative in our thinking there.”
Crypto asset companies have warned the UK risks losing ground in efforts to develop a digital assets sector, the report added.
