The Bank of England (BoE) has signaled openness to softening its regulatory approach to systemic pound-pegged stablecoins after facing backlash from lawmakers and industry leaders over certain proposed policies.
BoE To Revise Stablecoin Regulation ProposalAccording to the November consultation paper, the restriction would set limits of £10,000 to £20,000 for individuals and £10 million for businesses, mirroring its proposed approach to the digital pound.
In addition, the BoE suggested that systemic stablecoin issuers are required to hold at least 40% of reserves backing a stablecoin as unremunerated deposits at the central bank, aiming to ensure “robust redemption and public confidence, even under stress.”
During a meeting with the House of Lords Financial Services Regulation Committee, Breeden said the BoE remained receptive to alternative approaches that could achieve its financial stability objective without relying on its controversial proposals.
Industry Pressure Is ‘Very Real’Breeden reportedly recognized the technical difficulties with imposing the stablecoin caps but defended the central bank’s proposed rules, arguing that the caps “are there to support an orderly transition as the shape of the system changes.”
Benoit Marzouk, CEO of Tokenised GBP, the issuer of one of the few pound-pegged stablecoins currently available, told Bloomberg that there’s a “really small” window to get policy right. “It could be really damaging for the UK if we had this limit for both retail and companies,” he affirmed, adding, “As a business, you can’t do anything with £10 million.”
Meanwhile, Tom Rhodes, CLO at Agant, a company planning to issue a pound-denominated stablecoin, stated that tracking who’s holding the tokens would be “a massive administrative burden” for issuers.
The Deputy Governor also acknowledged the industry’s backlash, affirming that the pressure is “very real.” Although she asserted that the central bank has not received yet “the constructive engagement on a different way to solve the problem that I might have hoped for.”
In a letter to Chancellor Rachel Reeves, members of the House of Lords, the House of Commons, and peers argued that the financial regulator’s proposal to cap stablecoin ownership could prevent the UK from fully capitalizing on opportunities, drive innovation offshore, and lead investors to USD-pegged alternatives, while potentially positioning the UK “as a global outlier.”
Breeden announced that the central bank would release draft rules for public consultation in June. The bank aims to finalize the regulations by the end of the year to align with global regulatory standards.
