Lawmakers Say Bank of England Stablecoin Proposals Will ‘Limit Adoption, Push Activity Overseas’

Core Viewpoint - A group of British lawmakers is urging the Bank of England to reconsider its proposals that would impose caps on stablecoin holdings and strict reserve requirements for issuers, expressing concerns that these measures could hinder innovation and competitiveness in the digital finance sector [1][3]. Group 1: Proposed Regulations - The Bank of England's proposals include capping stablecoin holdings at $26,350 (£20,000) for individuals and $12.7 million (£10 million) for businesses, with potential exemptions for larger firms [1]. - Stablecoin issuers would be restricted to holding only 60% of their backing assets in short-term UK government debt, while the remaining 40% must be kept in unremunerated Bank of England accounts that do not earn interest [2]. Group 2: Concerns from Lawmakers - Lawmakers have expressed that the UK is moving towards a fragmented and restrictive regulatory approach that could deter innovation and push stablecoin activity overseas [3]. - The letter from lawmakers emphasizes the need for the UK to benchmark its stablecoin framework against leading international models to remain globally competitive [3]. Group 3: Industry Reactions - Industry representatives, including the CEO of CMC Markets, have warned that the proposed caps could disadvantage the UK compared to other jurisdictions that are not implementing similar restrictions [4]. - The trade association CryptoUK has welcomed regulatory efforts but cautioned against imposing caps on holdings, arguing that such restrictions could undermine the UK's ambition to lead in digital finance and attract capital [5].