The UK Just Dropped Its Stablecoin Rulebook—And That 40% Cash Requirement Could Reshape The Crypto Market

Core Viewpoint - The Bank of England has introduced comprehensive regulations aimed at establishing the U.K. as a global hub for digital assets, particularly focusing on stablecoins, which may influence major issuers to consider relocating to the U.S. due to its more lenient regulations [1]. Group 1: Regulatory Framework - The new proposals mandate that "systemic" stablecoin issuers must hold 40% of their reserves in non-interest-bearing accounts at the Bank of England and 60% in U.K. government bonds, marking a significant shift in the operational landscape for digital currencies in the U.K. [2]. - The U.K. is striving to implement its stablecoin and tokenization framework as quickly as the U.S. to maintain competitiveness in the evolving digital asset market [3]. Group 2: Central Bank's Vision - The Bank of England is actively working to establish a regulatory regime for stablecoins intended for widespread payment use, ensuring that the U.K.'s monetary framework is prepared for future developments [4]. - The approach emphasizes enabling responsible innovation in finance during a period of significant technological change, with the potential for tokenization and distributed ledger technology to enhance the efficiency of financial services [4]. - The U.K. aims to ensure that stablecoins can coexist safely with commercial and central bank money, contributing to a more diverse and resilient payments ecosystem [5].