The Bank of England is considering revisiting two stablecoin issues raised during a consultation that have proven unpopular, according to an FT report. The first relates to proposed stablecoin holding caps of £20,000 per stablecoin for individuals and £10m businesses. The second is a requirement that issuers hold at least 40% of assets at the central bank unremunerated.
Before discussing what Bank of England Deputy Governor Breeden said, there are important caveats about the topic. These controversial restrictions are not intended for stablecoins used in crypto. The UK is splitting the regime for stablecoins, with the Bank of England taking on a prudential role for systemic stablecoins (only), and these restrictions apply to systemic coins. The Bank previously indicated systemic means widely used in everyday payments rather than crypto. However, it has not provided detailed guidance on how ‘systemic’ might be assessed. Additionally, the objective of the holding limits was as a transitional step, to prevent a rapid flight from deposits.
Talking to the FT, Breeden’s wording was guarded about the caps when she said the bank is “looking very hard at whether there are different ways we can manage what we think is an important risk as stablecoins come into play” and adding that the Bank wants to ensure the new form of money is safe.
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