A cross-party committee in the UK House of Lords has called on the Bank of England (BOE) to rethink its proposed restrictions on stablecoin holdings, warning they could stifle the nascent market. The Financial Services Regulation Committee published its report, "Stablecoins: waiting for regulation," on Wednesday, urging a more cautious approach.
The BOE had previously suggested a holding limit of £20,000 ($27,000) per individual and £10 million ($13.5 million) for businesses, along with a requirement for stablecoin issuers to hold at least 40% of backing assets in central bank deposits yielding no interest. The committee argued that these measures were premature and could render the UK uncompetitive compared to neighboring markets.
"Given the early stage of the GBP stablecoin market, rather than pre-emptively impose holding limits, the Bank should consider monitoring the growth of the market and imposing holding limits only if the financial stability risks clearly warrant it," the report stated. It also expressed concern that the backing asset rules "could have a significant impact on the business viability of stablecoin issuers in the U.K."
The BOE has signaled it may ease these restrictions. Sarah Breeden, deputy governor for financial stability, admitted last month that the proposals were "overly conservative" and said the central bank was "looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play."
