The Bank of England (BOE) is set to ease proposed restrictions on stablecoin holdings following pressure from participants in the digital asset industry, the Financial Times (FT) reported on Thursday.
Sarah Breeden, deputy governor for financial stability, said the central bank’s original plans to limit individuals to owning up to 20,000 pounds ($27,000) per coin may have been “overly conservative,” according to the FT.
The BOE is “looking very hard at whether there are different ways we can deal with what we think is an important risk when stablecoins come into play,” Breeden said in an interview.
Stablecoins are cryptocurrencies pegged to the value of a traditional financial asset, usually a fiat currency, mostly the US dollar. They have been at the forefront of the development of mainstream adoption of digital assets, aided by the establishment of formal regulatory regimes in some major jurisdictions.
The BOE’s proposed restrictions risked preventing the UK from being competitive in the digital economy, crypto industry participants have said.
For its part, the central bank had described the proposed cap as “temporary”.
“What we’ve heard from industry is that the way we’ve proposed to implement limits is operationally cumbersome for a temporary measure,” Breeden said. “So we’re really open to considering whether there are other ways to achieve our goals.”
The BOE is also set to lower its planned requirement that at least 40% of stablecoin-backing assets be deposited with the central bank, bearing no interest, and 60% invested in short-term UK government debt – requirements that were more restrictive than in markets such as
“Not surprisingly, the industry would prefer to have more interest-earning assets as it goes to their bottom line,” Breeden said.
“These are important signals from the Bank of England that it is prepared to review its stablecoin proposals,” said Katie Haries, Coinbase’s head of policy for Europe, in an emailed comment. “We have long said that a cap on stablecoin holdings is a cap on innovation, with real and significant risks to UK competitiveness.”
The BOE did not immediately respond to CoinDesk’s request for comment.
