Earlier this week Sarah Breeden, the Deputy Governor of the Bank of England, gave a speech at the Point Zero Forum discussing the topic of stablecoins, hinting at a future direction for the UK. In 2023 the UK unveiled proposals involving two separate regulatory regimes: one for systemic stablecoins versus another for non-systemic stablecoins. Her speech indicated potential shifts from these initial proposals, responding to global developments and industry feedback.
For example, the Bank may allow systemic stablecoin issuers to earn some interest. And it is considering differentiating between payment stablecoins versus those used for other purposes.
Under the 2023 proposals, systemic stablecoins would be regulated by the Bank of England and backed by central bank money, making them very safe and easily interchangeable with regular currency, maintaining the “singleness of money”. However, the stablecoin issuer would earn zero interest, undermining a key business model.
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