The Bank of England has set out the shape of its stablecoin regime, easing several proposals the industry had warned could strangle a sterling-backed market before it got going.
In its final policy statement and a draft rulebook published Monday, the central bank dropped planned caps on how much of a stablecoin any one person could hold, replacing them with a limit on total issuance per coin, initially set at £40 billion ($52.8 billion)
This embedded content is not available in your region. It also relaxed the rules on what can back the tokens, letting issuers hold up to 70% of reserves in short-term UK government debt, up from a proposed 60%. The remainder must sit in non-interest-bearing deposits at the Bank.
That partly answers an industry complaint that the original split left too much capital earning nothing, though issuers had pushed for the yield-bearing share to go higher still. “This is a major milestone in delivering greater choice and innovation in UK payments,” said Sarah Breeden, the Bank’s deputy governor for financial stability. She added that, “Innovation thrives on trust,” calling the framework a “world leading regime” and lauding its “prompt redemption, strong protections and central bank support. The softening follows months of lobbying from the crypto industry, amid concern that its original plans could hold back the UK’s nascent sterling-backed market.